CPC profit up 82.9pc, despite herd rebuild

The company has reported a profit after tax for the 12 months ended March 31 of $37.1 million, up 82.9 per cent on the previous year.

Against a backdrop of decreased revenue, down 6.2pc to $154.6m courtesy of less numbers sold due to herd rebuilding, the result would be considered particularly pleasing.

Earnings before interest, tax, depreciation, amortisation and property revaluations of $49.7m were up 31.5pc on the 2106 figure.

CPC, foreign-owned and locally run, owns and operates 16 cattle stations across 5.5m hectares, with a carrying capacity of more than 400,000 head.

The company also has an 80pc interest in a joint venture running two Indonesian feedlots.

Chief executive Troy Setter said the work done to make sure the CPC portfolio had geographic diversity and to build a self-sustaining herd had positioned the business well to benefit from strong global demand for beef.

The move from being a cattle producer to an integrated global beef supplier and marketer continued to pay dividends, he said.

CPC’s biggest productivity gains have come via an accelerated genetics program which focuses on increased profitability through every stage of the supply chain, along with extensive water and fencing development.

“We are part way through a multi-year project to develop land cattle can’t efficiently graze, particularly in the north,” Mr Setter said.

This year’s work will increase carrying capacity circa 20,000 head across the group, while last year it was lifted by 25,000 head.

CPC continues to invest in genetics, nutrition, its stations, technology such as walk-over weighing and its team to increase productivity, according to Mr Setter.

Total assets for CPC at year end were up 12pc year-on-year to $880.5m, which Mr Setter said reflected the quality of the properties and a continued focus on portfolio optimisation and capital reinvestment.

CPC divested five stations, leased one back and continued to employ a conservative methodology to asset valuation during the year, he said.

Despite some notable challenges, most notably from Indian buffalo, demand in Asia for premium Australian beef was continuing to grow, particularly in Indonesia, according to Mr Setter.

CPC’s joint venture in Indonesia was providing valuable direct access to this large and attractive market, he said.

In a recent Q&A with Fairfax Media, Mr Setter said average beef consumption in Indonesia was close to two kilograms per person per year, yet the Organisation for Economic Co-operation and Development (OECD) figure was close to 14 kgs.

“There is massive opportunity for beef consumption per person to increase in Indonesia and Australia needs to ensure it maintains its reputation as a supplier of quality safe beef and cattle,” he said.

In announcing CPC’s 2017 financial results, Mr Setter said there would be some adjustments necessary but overall, the company was confident demand would continue to grow in Indonesia.