Diversification amid the dry should help Ruralco match its 2018 full-year result, while the agri-services firm says strong commodity prices should be another cause for investor optimism in the medium-term.
In a by-now familiar analysis of Australia’s farm sector, Ruralco chief executive Travis Dillon on Friday said a lack of rain both now and in mid-range forecasts loomed as the major challenge for the nation’s producers.
Mr Dillon pointed to drought-related price surges for wool, sheep, cattle, grains, and horticulture.
“A lot of parts of the country are still battling… but we’re seeing very high commodity prices compared to long-term averages,” he said at the company’s annual general meeting.
“The mid-term outlook for the sector is exciting.”
Mr Dillon said the company’s first quarter to December 31 was largely in line with the corresponding period in 2017, and he was looking to a break in the winter cropping season to continue the trend through to the May half-year financial report.
“For us, and the reason for our strong earnings, is the diversity of where our income comes from,” he said.
In his presentation to shareholders, Mr Dillon said irrigation water allocations remain low in the Murray Darling basin, which has lead to buoyant temporary water trading but has significantly reduced summer plantings, particularly rice and cotton.
He said the Bureau of Meteorology three-month outlook for February to April indicated a drier than average time for many agricultural regions of Australia, with reduced loan draw downs from continuing tough seasonal conditions potentially affecting finance commissions revenue.
The company’s remuneration report was passed with 98.11 per cent support, while chairman Rick Lee was re-elected with 99.79 per cent backing.
The company also farewelled departing director Michael Millner, who racked up 14 years on the board since the merger of Roberts and Ruralco in 2006.
Shares in Ruralco were trading 1.16 per cent higher at $3.065 at 1505 AEDT, but still down from November’s 12-month peak of $3.19.
Ruralco’s revenue in the 12 months to September 30 was up 5.0 per cent to $1.913 billion.