Agribusiness Ruralco Holdings is optimistic about the rest of the year given forecasts of above average rainfall over the winter cropping season and continued high prices for cattle and sheep.
Ruralco on Tuesday booked a record first-half profit of $10.8 million - up 3.2 per cent from a year earlier - despite tough seasonal conditions across most of Australia.
The result reflected strong growth from Ruralco's agency business, which sells livestock and real estate, and the live exports business.
Underlying profit for the six months ending March 31 rose two per cent to $11.5 million.
"Should the higher forecast rainfall eventuate over the next three months, this should support broadacre cropping regions and favourable inflows into the southern river systems," Ruralco chief executive Travis Dillon said.
"Together with continued high prices for cattle and sheep, the agency business should continue to perform strongly."
Ruralco said that, its agency business lifted gross profit by 10 per cent in the first half, boosted by strong livestock prices and higher real estate volumes.
Livestock prices are expected to remain high in the short- to medium-term given continuing global demand and tightening supply.
Demand for larger rural properties drove the real estate result as domestic and overseas buyers sought to benefit from higher returns in the cattle sector.
Ruralco's rural supplies and water operations also lifted gross profit.
Higher sales volumes in key markets boosted live export gross profit by 18 per cent, reflecting higher dairy cattle exports to China.
But Mr Dillon said that even though Ruralco made an extra shipment of dairy cattle to China, general demand for live dairy cattle in China had softened over the last 18 months.
Mr Dillon said live export margins were under pressure in short-haul destinations to Vietnam and Indonesia.
He said that as Chinese demand for breeder and dairy cattle eased, many live exporters were now targeting short-haul destinations to keep their vessels moving.
Ruralco said its Frontier live export business had moved into cattle backgrounding and finishing programs in northern Australia and grain feedlot trials for domestic supermarket and export processors in southern Australia.
Shares in Ruralco were three cents higher at $3.50 at 1048 AEST.
RURALCO'S FIRST-HALF RESULT
* First-half net profit up 3.2pct at $10.8m
* Revenue up 8.0pct at $803.7m
* Interim dividend down 1.0 cent to 8.0 cents, fully franked
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