Australian Agricultural shares gain on earnings and price outlook
By Madelene Pearson Bloomberg NewsPublished: February 6, 2007
MELBOURNE: Shares of Australian Agricultural, the nation's largest cattle rancher, rose 6.2 percent after the company reported earnings rising more than sevenfold before a herd revaluation and said cattle prices may gain this year.
Net income before interest, tax and cattle revaluation rose to 39.4 million Australian dollars, or $30.5 million, in the 12 months ended Dec. 31, from 6 million dollars a year earlier, the Brisbane- based company said Tuesday in a statement to the Australian Stock Exchange.
Benchmark cattle prices in Australia slumped 24 percent last year as an El Niño-linked drought forced ranchers to sell livestock they could not feed. Prices will probably rise in 2007, the company's chief executive officer, Don Mackay, said in an interview.
"We've already seen some recovery from last year in the month of January," he said. While Australia's total output may be lower because of the drought, "prices ought to see some recovery from last year," he said.
Shares of Australian Agricultural rose 13 cents to 2.23 dollars on the exchange in Sydney. The stock has gained 33 percent in the past year, compared with the 19 percent gain in the benchmark S&P/ASX 200 Index.
Net income after the cattle revaluation fell to 10.1 million dollars, or 4 cents a share, from 16.8 million dollars, or 7.1 cents a share a year earlier, Australian Agricultural said. Sales rose 42 percent to 213.2 million dollars.
The profit included a 17.3 million dollar write down of its trading cattle inventory, and "reflects the effect of falls in the cattle market, particularly in the latter part of the year," the company said in the statement.
The company was "sensitive" to market prices used to value the trading portion of its herd, Australian Agricultural said in October.
Most of the company's ranches had a good start to the 2007 season, "although more rain is still required across southern growing and back-grounding stations," Australian Agricultural said in the statement.
"The protocols restricting access of U.S. beef into Japan and Korea is likely to continue to provide opportunities for Australian beef to maintain its market share in these markets throughout 2007," the company said.
Forward purchases of grain ensures feed costs will not rise "substantially" for the majority of the 2007 season, Australian Agricultural said.
"The world supply of quality beef remains limited by historically low herd numbers in the U.S. and Australia, and herd health issues in South America," it said. "The world demand for clean, exportable beef remains strong."
The company is not "actively engaged in reviewing," the assets of Australian Meat Holdings to purchase that firm, Mackay said.
Without citing sources, the Australian Financial Review said Thursday that Australian Agricultural could be among possible bidders should Australian Meat Holdings, a division of Swift, the world's second-largest processor of beef and pork, be sold.
Australian Agricultural had 556,558 head of cattle on hand on station in the year ended Dec. 31, 2006, compared with 502,866 a year earlier, the company said.
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By Madelene Pearson Bloomberg NewsPublished: February 6, 2007
MELBOURNE: Shares of Australian Agricultural, the nation's largest cattle rancher, rose 6.2 percent after the company reported earnings rising more than sevenfold before a herd revaluation and said cattle prices may gain this year.
Net income before interest, tax and cattle revaluation rose to 39.4 million Australian dollars, or $30.5 million, in the 12 months ended Dec. 31, from 6 million dollars a year earlier, the Brisbane- based company said Tuesday in a statement to the Australian Stock Exchange.
Benchmark cattle prices in Australia slumped 24 percent last year as an El Niño-linked drought forced ranchers to sell livestock they could not feed. Prices will probably rise in 2007, the company's chief executive officer, Don Mackay, said in an interview.
"We've already seen some recovery from last year in the month of January," he said. While Australia's total output may be lower because of the drought, "prices ought to see some recovery from last year," he said.
Shares of Australian Agricultural rose 13 cents to 2.23 dollars on the exchange in Sydney. The stock has gained 33 percent in the past year, compared with the 19 percent gain in the benchmark S&P/ASX 200 Index.
Net income after the cattle revaluation fell to 10.1 million dollars, or 4 cents a share, from 16.8 million dollars, or 7.1 cents a share a year earlier, Australian Agricultural said. Sales rose 42 percent to 213.2 million dollars.
The profit included a 17.3 million dollar write down of its trading cattle inventory, and "reflects the effect of falls in the cattle market, particularly in the latter part of the year," the company said in the statement.
The company was "sensitive" to market prices used to value the trading portion of its herd, Australian Agricultural said in October.
Most of the company's ranches had a good start to the 2007 season, "although more rain is still required across southern growing and back-grounding stations," Australian Agricultural said in the statement.
"The protocols restricting access of U.S. beef into Japan and Korea is likely to continue to provide opportunities for Australian beef to maintain its market share in these markets throughout 2007," the company said.
Forward purchases of grain ensures feed costs will not rise "substantially" for the majority of the 2007 season, Australian Agricultural said.
"The world supply of quality beef remains limited by historically low herd numbers in the U.S. and Australia, and herd health issues in South America," it said. "The world demand for clean, exportable beef remains strong."
The company is not "actively engaged in reviewing," the assets of Australian Meat Holdings to purchase that firm, Mackay said.
Without citing sources, the Australian Financial Review said Thursday that Australian Agricultural could be among possible bidders should Australian Meat Holdings, a division of Swift, the world's second-largest processor of beef and pork, be sold.
Australian Agricultural had 556,558 head of cattle on hand on station in the year ended Dec. 31, 2006, compared with 502,866 a year earlier, the company said.
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