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AACO profits survive pandemic, but Chinese suspensions may bite

Australian Agricultural Company has reported a $38 million turnaround in profit and said the impact from COVID-19 had so far been negligible.

May 20, 2020, updated May 20, 2020
The Australian Agriculture Company's Wagyu sales to Asia are up 19 per cent. (Photo: Unsplash)

The Australian Agriculture Company's Wagyu sales to Asia are up 19 per cent. (Photo: Unsplash)

The Brisbane-based company’s profit was $15 million versus a $22 million loss last year, with the strongest operating cashflow in three years despite a $42 million hit from seasonal factors.

The company said it was now accelerating its move into the retail markets in South Korea, the US, Canada, Australia, China, Singapore, Hong Kong and Europe because of the COVID-19 pandemic.

But the suspension of trade by China from four Australian abattoirs was likely to have an impact and the company and AACO said it was working with the Australian Government to respond to the implications.

It said only about a third of its exports to China were not impacted by the suspension and it was diverting supply to other markets.

Its earnings before interest and tax was $80.1 million, compared against a $182 million loss last year. The $254 million swing was on the back of a higher value on its herd after live cattle markets recovered from a 2019 slump. Property values were also up $60 million.

Wagyu sales were up 19.7 per cent with a similar rise in overall sales to Asia. The sales from the North America market rose 34 per cent.

Managing director Hugh Killen said it had been a satisfying year for the company but the company could not estimate the impact of the COVID-19 pandemic.

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“By the second week of March all 16 of our export markets had been impacted in some way by COVID-19,” Killen said.

“These are uncertain times for food service globally and the impact is still to be fully understood as the world comes to terms with the long-term recovery from COVID-19 on everyday life.

“We are now doing further work with our distributors and wholesalers to accelerate our supply into the world’s largest supermarkets, gourmet butchers and direct to customers online.”

 

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