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Beef producer's new strategy delivers

Australian Agricultural Company has lifted its full -year profit after almost doubling the amount of beef it sells.

Shares in Australian Agricultural Company have soared after the cattle and beef producer's full year profit jumped more than sevenfold to $67.8 million.

The growth comes on the back of the company's shift toward selling packaged meat and reducing the number of cattle it sells to the live export trade.

Sales revenue soared to $489 million in the 12 months to March 31, from $338 million in the prior year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) also jumped, rising 87 per cent to $132 million.

"Our strategic decision to own cattle right through our supply chain has increased revenue and margin," chief executive Jason Strong said.

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"We are not done. This result just provides a solid platform for us to grow."

Over the past three years, AACo has transformed from a cattle producer into an integrated beef producer and exporter, after opening a large abattoir in Darwin and focusing on extracting the maximum value out of its own herd.

Beef sales accounted for 88 per cent of revenue in 2015/16, up from 61 per cent two years ago. The company said it received higher live cattle prices, but this was offset by lower volumes sold on the market.

AACo plans to refine branding for its beef in key markets to benefit from premium pricing.

It is also investing in technology such as data analytics, pasture mapping, grazing management and genetics in order to improve the consistency of its beef production.

The company did not declare a dividend, but said the board would look to reinstate payouts once it returns to sustainable operational cashflows.

The strong results were welcomed by investors, with AACo shares adding 18.5 cents, or 12.4 per cent, to $1.68.


2 min read

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Source: AAP



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