14 Aug 2013

Massive profit drop for Ravensdown

6:17 am on 14 August 2013

Ravensdown is selling most of its operations in Australia as it works to recover from the financial hammering it has taken there - a hammering which has contributed to a drop in profit of $46 million.

The fertiliser co-operative has reported a net profit before tax of $6 million for the past year, $46 million less than the previous year.

As a result, Ravensdown won't pay shareholders a rebate on purchases of fertiliser for the first time since it started 35 years ago.

Chief executive Greg Campbell said a drop in fertiliser sales because of the drought had an impact, but losses in Australia of more than $20 million accounted for a big chunk of the profit drop.

It entered Australia in 2008, when it merged with Western Australia's United Farmers Co-op.

"Ravensdown went into Australia with good strategic intent and there are a number of things over the period that have made it difficult," Mr Campbell said.

"There have been some execution issues and there has been some market issues."

The co-op had reviewed its operations and as a result would sell its stake in a South Australian joint venture, Direct Farm Inputs, and exit its loss-making Western Australian business.

"The reason we're doing that is it will free up capital, it reduces the risk we have across our business, it increases our operating profitability and lowers our debt position," Mr Campbell said.

The discovery of the chemical residue dicyandiamide in some New Zealand milk products also cost Ravensdown $4 million, because it had to stop sales of its eco-n nitrification inhibitor which contained the chemical. Farmers sprayed it on their pasture to reduce nitrate leaching and greenhouse case emissions.