Farmer PrimeAg Australia says its inaugural full-year profit will be "well below expectations", following difficult seasons in grain and cotton and a slump in global agricultural commodity prices.
But PrimeAg says its business model is capable of achieving returns as indicated in its prospectus issued just over a
year ago.
"The profit outcome for our first full year of operations will be well below expectations, reflecting the aggregated impacts of limited cotton planting, a rain affected winter crop harvest, and a significant global slump in agricultural commodity prices," it said yesterday.
But "we believe that, given average seasonal conditions, and average long term commodity prices, the PrimeAg business model is capable of achieving returns in line with those indicated in the prospectus issued a little over a year ago to support the formation of the company".
PrimeAg executive chairman Peter Corish said that the outcome of the winter crop harvest, and a reduced summer crop programme would restrict earnings for 2008/09.
Both winter and summer crops in the 2008/09 programme had been produced on inputs costs, principally fuel, fertiliser and chemicals, prices for which had risen sharply during 2008.
He said over recent weeks, prices of these inputs had declined significantly, and if sustained, this would support reduced operating costs for the 2009/10 cropping programme. Mr Corish said that PrimeAg's earnings in fiscal 2009 would be "skewed towards a stronger second-
half result".
PrimeAgs first half-result will be released by February 27. AAP
