AUSTRALIAN Agricultural Company Limited revenues fell by 21% as COVID-19 restrictions on the restaurant sector resulted in lower demand for cattle.
But despite the challenges, AACo reported positive operating profit of $23.5 million and positive operating cash flow of $22.3 million.
CEO Hugh Killen said the company has navigated the ongoing uncertainty and global impact of COVID-19 and pivoting to a greater focus on retail.
That pivot and agile approach led to average meat sales price per kg improvement of 14.5%, which resulted in a saving of $22 million in controllable costs, also supported the positive result.
“The full force of COVID-19 hit the restaurant sector right as we began our ﬁnancial year, with our 16 food service markets severely impacted in a matter of weeks. To overcome the initial challenges and post a positive half is a notable achievement.
“However, while this interim result is commendable, we are mindful there are many challenges still to come and a number of complexities to work through over the next six months,” he added.
“We were able to generate savings through reductions in external backgrounding and feeding costs. cattle transport and processing. as well as travel expenses as a result of COVlD-19,”
Killen said the global outlook for COVID-19 remained volatile.
“Many restaurants remain closed or are having to adapt to reduced volumes and it will likely be some time before we see the food service sector return to normal.
“Supply constraints that exist across the Australian herd as a result of natural disasters including the drought, will also be felt by AACo. MLA has forecast the national cattle slaughter to decline 17% in 2020 with further decreases in 2021. AACo’s ﬁrst half meat production was 9% lower vs pcp, and lower meat and cattle sales are expected in the second half.” Killen said.