Cattle Export Ban to Indonesia Fails to Dampen AAco Revenue
The temporary ban on cattle export to Indonesia failed to dampen the growth of the Australian Agricultural Company (AAco) which even registered a 40 per cent improvement performance that led into a $10.5 million net profit.
The figures were part of the 2011 full-year result for AAco which enjoyed a revenue growth of 32 per cent due to good pastoral conditions and despite the high Australian currency.
The export ban to Indonesia dented the company's income by $5 million to $8 million, AAco Managing Director David Farley said.
"We had a supply chain of animals set up ready to go to Indonesia with beast of different weight in different locations. The cattle kept putting on weight, so we had to find somewhere else for them to go," Mr Farley told The Australian.
He insisted that AAco would remain a strategic supplier of cattle to Indonesia while the firm is also pursuing at the same time opportunities in other Asian countries such as Vietnam and the Philippines, and hiking shipments to Europe.
Mr Farley said that 2011 was the second year on the firm's three-year turnaround strategy and expressed confidence that AAco, Australia's oldest company, could reach better results in 2012 and become cashflow-positive. Until the better results are in, AAco shareholders would have to wait for declaration of dividends.
"AAco believes it will be well positioned to take advantage of the tightness of global beef supply and the extremely positive pricing environment to increase profitability, once a steady-state herd has been achieve in line with our plans during 2012," Mr Farley said.
AAco is building an $80-million abattoir in Darwin to slaughter cattle from its Northern Territory holdings and is seeking a partner for the venture. The firm is also seeking a $35-million commitment from the territory or federal government for related infrastructure costs.
Indonesia temporarily banned the entry of Australian beef but eventually lifted the ban although it cut import permits drastically claiming the move seeks to help develop a self-reliant cattle industry in the country. However, observers believe the cut in import permits was in retaliation for a video footage that exposed poor conditions in Indonesian slaughterhouses.