Ravensdown has started discussions with staff at its Dunedin factory site at Ravensbourne on the possibility of ceasing manufacturing in response to lower sales and demand.
It has also started the partial sale of its lime assets.
The co-operative made the announcement as part of its annual results, at which it reported an operating surplus of $27.4 million from continuing operations and before impairments and tax, which compares to $5.9m in 2022-23.
The net profit from continuing operations after tax was $2.8m ($2.9m).
“With lower demand, Ravensdown has more manufacturing capacity than required across our three manufacturing sites,” said chief executive Garry Diack.
“Yesterday we met with employees at our Ravensbourne manufacturing plant in Dunedin to let them know we will shortly be consulting with them on a proposal to cease our manufacturing operations there and continue operations as a port store and distribution centre only.”
Diack said the proposal will not impact manufacturing operations in Napier or Christchurch.
A decision on the future of Ravensbourne will be made by the end of September.
“We have also commenced a market valuation and partial divestment of our lime assets and expect to be in a position to confirm further details in the coming weeks.”
Diack said it is a tough operating environment for farmers, growers and the wider agricultural sector with fertiliser sales down across all farm types.
Sales were 891,000 tonnes, down 0.4% compared to the previous year and significantly lower than 2021-22 when Ravensdown had sales of 1.2 million tonnes.
These lower sales were reflected in a revenue drop of $186m, to $757m, ($977.5m in 2022-23).
“We have been deliberate in our intent to provide the best possible price for our customers in a year when their discretionary farm expenditure remains under pressure,” he said.
“Equally we have maintained a strong focus on the core strength of the business in terms of cashflow, value, and profitability to ensure a sound and sustainable service, and ongoing investment for our shareholders.”
Inventories at year-in were $57m lower at $150m, debt was $76m, down 41%, and operating costs were flat.
Chair Bruce Wills said balance sheet equity has lifted to almost 80%, but the level of profitability in an environment of low demand and sales means the co-operative cannot pay a shareholder rebate this year.
“In these volatile times, it is reassuring to our shareholders that we have increased the strength of our balance sheet, but it is prudent to continue to conserve funds.”
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