Australian Agricultural Company (AAco), enjoyed a strong lift in its operating profit for the first half of the 2020-21 financial year thanks to better prices for meat sold.
The company said operating profit rose 273% to $23.5 million on a fatter price for meat – up 14.5%, according to the interim report released on Thursday.
Earnings rose despite a noticeable lower sales for the half compared to the prior corresponding period. Total meat sales dipped 2.7% to $102.9 million but cattle sales dropped 46.6% to $41.1 million.
Investors liked the fatter financial results, with AACo shares up 5.6% to $1.21 at the close. There was no dividend.
On a statutory basis, the company reported a net loss of $1.7 million – much improved from the $14.1 million loss for the prior corresponding period 0f 2019-20.
AACo was one of many food businesses hit by lockdowns and social distancing rules around the world earlier this year that were designed to tackle the spread of the virus.
The restrictions closed restaurants, hotels, cafes, and other establishments that buy quality meat from the foodservice sector, which is a major sales channel for AACo.
Because of the closures AACo switched to retail sales. It also had to steer some of its beef from China to other markets, after one Australian abattoir licensed to process beef for China lost its accreditation earlier this year.
Looking to the rest of the year the company was circumspect and the CEO warned that lower meat and cattle sales are again expected in the second (March) half.