Ridley: ‘Fundamentals of the business are good’
The Australian manufacturer produces complete feeds mineral concentrates, nutritional blocks and supplements targeted at dairy cows, poultry, pig, beef, horse, sheep and dogs.
In announcing its financial results for the half year up to December 31, 2019, the company reported an operating EBITDA of AUS $30.7m (US$19.9m) for the period, marginally up on the prior year’s H1. It recorded consolidated EBITDA of AUS $15.5m, after providing AUS $7.2m for the closure of a feed mill at Murray Bridge, AUS $2.9m on internal business restructuring, and AUS $1.9m for the settlement of a legal claim.
Newly appointed CEO and MD, Quinton Hildebrand, said Ridley experienced a slow start to the year and then a pick-up in volumes as it switched to supplementary drought feeds.
Hildebrand, who took on the role in August last year, noted how the business had a large overhead structure that was weighing on costs. Its Murray Bridge feed mill was significantly underutilized and had been losing money since the expiry of a supply contract in October 2018, he added.
Ridley is now focusing on certain optimization initiatives aimed at simplifying the business, installing automation, leveraging its raw material and consumable procurement and rationalizing the supply chain, he said.
Earnings growth, said the new managing director and CEO, will be fueled by the commercialization of its pipeline of innovation opportunities, of which its additive for prawn diets, Novacq, is the most significant.
Ridley has purchased 50 hectares of land in Thailand encompassing the existing Novacq production ponds and the remaining 51% of the nearby Pen Ngern feed mill.
“These production facilities provide the ideal footprint for the long-term expansion of Novacq operations in Thailand and the foundation to supply Novacq and prawn feed to prawn producers in the Asia Pacific and Middle East regions,” said Hildebrand.
Ridley also reported that the construction of its new feed mill in Central Victoria is progressing well and remains on target for completion in the current financial year.
Outlook
The recent rains have broken the drought in many parts of Australia, noted the CEO. However, he said while such rains will have little impact on national grain supply, Ridley anticipates less demand for supplementary feeding for beef and sheep, and reduced supply of raw material to its rendering plants.
“However, with growth in volumes across poultry, pig, dairy and aqua feed, the fundamentals of the business are good.”
