The nation's biggest stockfeed business, Ridley Corporation, continues to firm up its balance sheet in anticipation of acquisition opportunities, although statutory net profit dipped marginally to $42 million in 2022-23.
Revenue jumped 20 per cent to $1.2 billion and underlying net profit after tax was also up $5.6m (15pc) on the previous financial year as the company reported 6pc sales volume growth for packaged pet and stock feeds, an 11pc rise in ruminant feed volumes, plus its first ever profit from NovaqPro prawn farm feed.
Emerging biodiesel market options in Singapore and the US are also being closely watched after higher market prices for rendered tallow and oils helped the business.
Ridley, the company behind prominent feed brands such as the Barastoc and Rumevite ranges for the poultry, pig, horses, cattle, sheep and goat sectors and Cobber dog food, will pay a 4.25 cents a share end of year dividend to shareholders, including billionaire investor, Andrew Forrest, who accumulated 6pc of the business last year.
Total dividends for the year of 8.25c are up from 7.4c/share last year.
Melbourne-based Ridley currently operates 19 feed mills between North Queensland and South Australia, plus an aquafeed plant in Thailand.
Earlier this year the company modified its organisational structure to concentrate five high-volume monogastric mills in a dedicated business unit servicing about 75pc of its bulk stock feed operations, largely corporate scale pig and poultry farms.
The changes have enabled Ridley to more efficiently respond to these customers and plan for growth in the sector.
Strong performer
Managing director, Quinton Hildebrand, told an investor briefing an upgrade at the Clifton monogastric mill on Queensland's Darling Downs would add about 35pc extra capacity, enabling it to service a growing broiler farm footprint spreading west from traditional poultry industry territory on Brisbane's outskirts.
Meanwhile, the company's packaged feed and ingredients segment was a strong performer, with earnings before interest, tax, depreciation and amortisation up from $58m to $66m as it trimmed operating costs and focused on differentiating rendered products for premium markets which, in turn, generated higher returns.
Mr Hildebrand noted in US and European feed markets about 40pc of input materials used in these categories were "premiumised" and Ridley had a multi-year strategy to continue its premiumisation journey with this goal in mind.
The company was working with customers to develop more premium companion animal and aquaculture products, having also diverted underutilised aquafeed extrusion capacity to service its increasing pet food customer base.
At its Narangba plant north of Brisbane, a new packaging line and large-scale extruder would boost extrusion capacity by 10pc when it began operating in December.
Biofuel prospects
Although strong tallow prices early in 2022-23 had moderated, he said a surging biodiesel market also offered important market considerations.
Ridley already exported tallow to Singaporean processors and had access to additional local bulk storage facilities to improve its renewable energy market options, especially as the US biodiesel industry was gaining momentum with new plants being built.
Chief financial officer, Richard Betts, said Ridley's strong balance sheet would also allow the company to take on acquisition opportunities if they emerged, were earnings accretive and complementary to its existing strategies.
We think, perhaps, the increasing cost of debt may now bring some potential vendors to the table
- Richard Betts, Ridley Corporation
While options had been considered during the past year or two, the costs and returns involved had not stacked up.
The company's board and management were remaining patient.
"We think, perhaps, the increasing cost of debt may now bring some potential vendors to the table ... and hope expectations of vendors will be more realistic," Mr Betts said.
Horse-feed producer Hygain Group was recently speculated as possibly takeover target for Ridley after it tested the market appetite for a new owner in March.
Private-equity firm, Adamantem Capital, has held a majority stake in 40-year old Hygrain since 2017 and has helped significantly expand the family business.
Ridley spent $11.3m on maintenance and a further $23m on growth capital expenditure projects last financial year, including four "de-bottlenecking" projects at its monogastric mills in St Arnaud and Wellsford in Victoria and Wasleys in SA, and the Terang ruminant mill in Western Victoria.
These projects lifted bulk stockfeed capacity by 10pc and would be followed by 5pc more capacity gains after similar work at Clifton and the Pakenham ruminant mill in Victoria.
Investors approved of Ridley's growth plans and earnings results, with the its share price jumping 15c to $2.15 after the profit result was released - price territory it has not occupied since April.
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
