It could be another year before fertiliser sales recover – and even then, Ravensdown believes, demand will be lower. It is realigning its production capacity accordingly.
The co-operative’s chief executive, Garry Diack, thinks a combination of sheep and beef being likely to take longer to recover, land use change, the greater use of technology, and competition mean volumes will fall.
In the short term he expects it will be a year before unfavourable exchange and interest rates and on-farm inflation ease and demand and confidence recover.
The company has started discussions with staff on a proposal to close its Dunedin manufacturing works at Ravensbourne, retaining it as a bulk store and distribution site.
“It is unlikely volumes will get back to 1.1-1.2 million tonnes for us,” Diack said.
Ravensdown has manufacture capacity for 700,000-800,000 tonnes of superphosphate a year at its three plants – Napier, Christchurch and Dunedin – but needs only 400,000t split between a plant in each island.
“It’s an efficiency step in a low-volume market,” he said.
The Ravensbourne plant requires renewal of its emissions consent and although the Hornby plant is surrounded by homes and businesses, Diack said it is closer to more diverse fertiliser markets.
Ravensdown is also looking at whether ownership of six lime quarries is the best use of shareholders’ capital.
Diack said it could buy lime from a manufacturer, as it already does with urea. The co-operative made these announcements as part of its annual results presentation, in which is 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 after tax from continuing operations was $2.8m ($2.9m).
Sales were 891,000t, 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).
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.
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