Rural Equities annual profit slides 31 percent on property revaluations, drought; lifts dividend

Rural Equities, the farming group controlled by the Cushing family, reported a 31 percent drop in annual profit as property revaluations lagged behind those from a year earlier, and as the North Island’s worst drought in seven years ate into operating earnings.

Net profit fell to $10.9 million in the 12 months ended June 30, from $15.8 million a year earlier, the Hastings-based company said in a statement. Profit included a gain in the 27-farm property portfolio of $4.9 million, smaller than the $14.3 million revaluation in 2012. Operating earnings declined to $2.1 million from $2.9 million as the drought increased the cost of feed, and the farms received lower prices for milk, sheep and wool.

“The directors strongly believe in the positive long-term outlook for premium agricultural assets in Australia and New Zealand,” chairman David Cushing said. “With a quality portfolio of farms in New Zealand, some interesting growth opportunities and a strong balance sheet, REL is well positioned.”

Rural Equities reviewed milk supply options for its six dairy farms in the year, settling on supply Synlait Milk from its two Canterbury sites, and sticking with Fonterra Cooperative Group for the remaining four. That meant the company could cash up half its Fonterra shareholding, for some $5.9 million.

The board declared a dividend of 6 cents per share, payable on Oct. 2 with a Sept. 20 record date. That’s up from 5 cents a year earlier.

Since the June 30 balance date, Rural Equities and the Cushings built up a combined 17.7 percent stake in ASX-listed agribusiness Tandou, in a bid to ride on the Australia firm’s existing water rights.

The shares, which trade on the Unlisted platform, were yesterday at $3.90, valuing the company at about $139.8 million.


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