Ravensdown lifts profit, pays $42/tonne rebate

The once-debt laden fertiliser co-operative, Ravensdown, said it had raised its pre-tax profit and was able to pay its farmer-shareholders a rebate of $41 a tonne on purchased products.

Ravensdown has announced a profit before tax and rebate figure of $62 million for continuing businesses in the year ending May 2016, up from $46 million a year earlier.

Shareholders have already received $21 cash per tonne of this total rebate by way of an interim rebate payment in June.

By the time the remainder of the total rebate is distributed, a fully paid-up shareholder who bought 100 tonnes of fertiliser will be better off by $4,100 - equating to more than $44 million being returned back to the rural economy, Ravensdown said.

Chairman John Henderson said Ravensdown led general price reductions four times and capped its spring superphosphate prices over the year.

For urea and superphosphate, these price initiatives were worth more than $60 million on an annualised basis for New Zealand farming.

The co-operative invested $33 million into infrastructure and $4 million into research and development during the year.

Equity was further improved via retained earnings with equity ratios now at 84 per cent and the co-operative was net debt-free in 2015-16.

This compares to 2012 when the equity ratio stood at 41 per cent and the company owed $355 million, due mostly to an ill-fated expansion into Australia and inventory problems.

"It's satisfying given that three or four years ago we were not in too good a spot," Henderson said.

"We sat down and had a look at ourselves and developed a new strategy and have stuck to that religiously, so it's good to see that paying off," he told the Herald.

Falling fertiliser prices throughout the year was "a good problem to have" and the co-op passed on lower prices to shareholders as frequently as it could.

Despite the dairy downturn, it appered that farmers had not scrimped on fertiliser - with tonnage being down by just 2 to 3 per cent over the year.

"Also, we think that farmers, particularly dairy farmers, are thinking that grass is the cheapest input that they can provide," he said.

Henderson said the strong New Zealand dollar had helped to bring down the cost of its inputs, most of which come from overseas.

Chief executive Greg Campbell said a result for 2016/17 was difficult to forecast both for our customers and for Ravensdown.

"From a global fertiliser supply perspective; we are seeing significant production capacity coming on stream around the world and we can use this trend to benefit New Zealand's agrisector," he said.

Ravensdown is one of two major fertiliser co-operatives, the other one being Ballance.