February 11, 2009
AAco reports US$25 million loss for 2008
Beef producer Australian Agricultural Company Ltd (AAco) has announced an A$38.7 million (US$25.3 million) loss for 2008.
AAco had expected the loss early this month, citing drought and non-cash accounting adjustments. In comparison, AAco earned a net profit of A$3.6 million (US$2.3 million) in 2007.
AAco CEO Stephen Toms said the full year loss partly reflects the significant additional costs incurred to manage the cattle business through dry conditions that prevailed throughout much of rural Australia during the second half of 2008.
Toms said "the uplift in cattle prices experienced in the third quarter was not sustained during the closing months of the year as global financial markets imploded. Since September 2008 the cattle price has steadily declined, falling 17 percent from 360c/kg to just under 300c/kg, as importers have focused on running down inventory. The mark to market of AAco's cattle herd at 31 December 2008 resulted in an increase of only A$4 million (US$2.6 million) for the second half."
The reported loss also included a mark to market expense of A$24.9 million (US$16.3million) as a direct result of the interest rate and currency volatility arising from the financial crisis in October 2008 and the accounting standard requirement in relation to interest rate swaps.
