Low rainfall across Australia is predicted to drop Ruralco’s profit by up to 70 percent.
The Argibusiness giant claims that a lack of rain across major agricultural regions has resulted in a reduction of demand for agricultural chemicals, lower livestock prices and slow merchandise sales according to the SHM.
Ruralco’s shares dropped to $3.08 on Monday, a 7 per cent fall after informing investors that the underlying profit, excluding one-off items, would be between 60-70 per cent lower than the previous year’s takings of $11 million.
John Maher, managing director of Ruralco has stated that the lost profit will be difficult to recover, however strengthening livestock prices, strong winter crop plantings and structural savings should lead to a more positive result mid financial year.
“Flow-through benefit of structural savings and part-year contributions from recent acquisitions is expected to lead to a significantly improved trading performance in the second half of the financial year.” Maher said.
Adverse weather conditions have resulted in a 5 per cent drop of rural supplies such as disease and pest management products along with 30 percent drop in sheep prices and an 11 per cent reduction in cattle prices.