Ridley Corporation Ltd (ASX: RIC) released its 2019 first half financial report this morning, showing positive growth in revenue and NPAT.
Ridley is Australia’s leading provider of high-performance animal nutrition solutions. Opening and listing on the ASX in 1987, Ridley quickly grew through strategic acquisitions and now has 21 sites across Australia producing approximately 1.9 million tonnes of finished feeds and feed ingredients each year. Some of Ridley’s largest brands include Barastoc, Cobber, Rumevite and Primo.
Here Are the 3 Key Points
- Revenue increased 17% to $523.5 million
- NPAT increased 29% to $16.1 million
- Total comprehensive income increased 26% to $15.7 million
Management Commentary
Ridley’s Managing Director, Mr Tim Hart, commented on the HY report, stating, “There were a number of factors influencing the half year result, one of which was a sharp and sustained increase in raw material prices, from which there has been negligible relief as at the date of this report.”
He goes on to mention that for more intensively farmed industries, Ridley passes this increase on to the end customer. He noted that higher grain prices had a negative impact on operating margins for Packaged Products, resulting in price rises for the customer.
“Against this backdrop, the improved sales volume is a particularly pleasing performance,” Hart added.
Commenting on each of the sectors, Mr Hart noted, “The Dairy, Beef and Sheep business unit was the standout performer for the half year, with a record result recorded not only from the sharp rise in beef and sheep drought feeding in New South Wales and Queensland but also generated from a positive strategy to support dairy farmers and provide the appropriate incentives to maintain their feeding regimens despite the impact of higher raw material prices.”
Ridley’s Outlook
Mr Hart stated that the long-term outlook for Australian livestock remains positive, but also conceded the industry does have its cyclical ups and downs. He noted that while the, “first half year performance was exceptional for Diary, Beef and Sheep, we expect a pull back in feed demand in the second half year”, due to increasing grain prices impacting farmer returns.
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Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.
