AACo drops to $95m loss on falling cattle price

Australia's largest listed agricultural company, AACo, has marked down the value of its herd by $150 million as it reported a $95m loss for the full financial year.

According to the cattle producer's financial statement, at March 31, 2023, it valued its herd at $1,698 a head but reduced that 21% to $1,347 at the same point this year. 

Herd numbers rose 5% to 453,968 over the year.

Sales grew 7% to $336m supported by a 24% rise in meat sales, including a 10% rise in its branded Wagyu business.

"This FY24 result once again demonstrates the value of our branded beef strategy," said CEO Dave Harris.

"Our ability to increase sales volumes whilst experiencing price resilience shows the strength of our supply chain and the value associated with our branded beef."

The company did not declare a dividend and its shares fell more than 2% on the day.

Mixed results across global markets

Australia and Asia were particular standouts in terms of branded meat sales, while America and the Middle East and Europe dropped away. The company reported branded beef sales for the following territories;

• North America 

  • Sales value down 7%, Price/Mix down 1%, Volume down 6%

• Asia

  • Sales value up 32%, Price/Mix up 4%, Volume up 28%

• Australia

  • Sales value up 24%, Price/Mix down 16%, Volume up 40%

• Europe/Mid East

  • Sales value down 18%, Price/Mix up 1%, Volume down 19%

The company's trim business, representing 50% of total sales, saw a 21% rise in sales value, a 27% rise in volume, but a 6% drop in overall prices. It highlighted lower Chinese demand and tightening monetary policy globally as exerting downard pressure on prices.

Outlook

AACo told the market it expected global meat sales conditions to remain uncertain into 2025 but that the global oversupply of beef due to the US herd liquidation should ease in late fiscal 2025. The company expects inflation to ease at that stage which should "alleviate pricing pressures across our Wagyu boxed beef and live cattle sales".

The company spent $36.5 on expanding its asset base, contributing to a 12% increase in capacity at its Goonoo Feedlot.

Sustainability

AACo became a 10-year, Tier-1 Partner in the Zero Net Emissions Ag CRC and generated $4.3m from 127,900 Australian carbon credits. In total it holds almost 500,000 ACCUs at a value of $16.3m.