Australian Agriculture Company has cut its first-half loss by 80 per cent on what the company says were its strongest Wagyu meat sales to date.
The cattle and beef producer remains $14.1 million in the red for the six months to September 30 after absorbing $36 million in drought-related costs during the period, but it said the successful roll-out of its premium branded beef strategy had helped reduced its net loss from $68.4 million a year ago.
AACo said the one-off benefit realised last year from winding down its troubled Livingstone and 1824 supply chains meant first-half operating profit was down 20 per cent to $6 million, but its core branded Wagyu range has achieved sales growth just short of 10 per cent to $102.8 million.
Shares in the company were up 2.97 per cent to a near two-month high of $1.04 by 1037 AEDT, still 16.8 per cent down from $1.25 a year ago.
Total meat sales fell 28 per cent, from $146.4 million to $105.8 million, while total cattle sales increased 4.0 per cent to $77 million.
AACo carried out seven launches of its premium Westholme brand over the last six months, including in London, Hong Kong, Los Angeles and Chicago.
It has also upgraded its distributor partnerships in the UK, Europe and the US while embedding sales and marketing teams across key markets in Europe, Asia and the US.
“Our ambition to grow our premium brands and pursue our strategy as a branded food business has accelerated in the last six months, with encouraging results,” managing director and chief executive Hugh Killen said on Wednesday.
“The feedback from chefs and diners has been tremendous … our targeted engagement with them, both directly and through our distributors, has helped form strong new partnerships and significant potential for future growth.”
Mr Killen said the results came despite the ongoing impact of drought, with strategic destocking over the past 18 months – as well as strong global beef prices – positioning it well for future seasonal variations.
The company said increased costs of transport, feed, and production delivered a $36 million hit during the first half, $11 million more than in the same period last year.
February’s flooding across north Queensland also weighed on the result, though Mr Killen praised his team’s response to the event.
He said enhanced infrastructure development was underway and likely to cost $9 million.
The company will not pay an interim dividend, unchanged from a year ago.
In a separate release, the company announced that Shehan Dissanayake would cease his role as an executive director, but continue on as a director after helping to develop and implement AACo’s transformation strategy.
WAGYU HELPS AACO WEATHER DROUGHT, FLOODS
* Operating profit down 19pct to $6m
* Net loss of $14.1m, down 80pct from $68.4m loss pcp
* No interim dividend, unchanged