Australian Agricultural Company Limited (AACo) has reported a 1HY20 operating profit of $23.5 million and positive operating cash flow of $22.3million.
AACo managing director and CEO Hugh Killen said considering how challenging the period had been, a positive half was a “notable achievement”.
Navigating COVID-19, pivoting to a greater focus on retail, disciplined focus on cost reduction and improved price per kilo of meat sales all contributed to the result, Killen said.
Overall revenue was down around 21 per cent pop due to lower cattle sales and AACo brandings. Its 1H meat production was 9 per cent lower pop and lower meat and cattle sales are expected in 2H.
Killen said: “We’ve been able to leverage the partnerships that we have built with distributors and other customers, along with our in market presence and wide distribution footprint, to open up and grow these and other retail channels.”
AACo’s flagship brand Westholme grew seven per cent to account for 22 per cent of all meat sales.
A push to streamline operations produced a reduction in controllable costs of $22 million. Killen said: “We were able to generate savings through reductions in external backgrounding and feeding costs, cattle transport and processing, as well as travel expenses as a result of COVID-19.”
Killen reiterated the global outlook remained volatile and that it “will likely be some time” before the food service sector returns to normal.
Supply constraints due to natural disasters including the drought will continue to be felt, with the Meat & Livestock Association forecasting national cattle slaughter to decline 17 per cent in 2020 and further decreases in 2021.
