August 13, 2008

Beef cattle producer Australian Agricultural Co. reported Tuesday (August 12) a net loss of AUD2.2 million in its first half ended June 30, compared to a net profit of AUD5.9 million a year earlier.

Revenue in the latest period was AUD123.6 million, down from AUD142.2 million in the year-earlier period, while an interim dividend of seven cents a share was declared, unchanged from a year earlier.

Australian Agriculture warned that first-half earnings are not a reliable guide to full-year performance due to significant cattle market movements.

The company, Australia's biggest beef cattle producer, highlighted a positive operating cash flow of AUD5.9 million in the latest period, compared to a negative cash flow of AUD20 million a year earlier, a swing primarily attributed to the sale of breeding cattle held over from the year-earlier period.

Stephen Toms, company chief, said the 2007 fiscal first half result included the benefit of a net AUD8.8 million litigation settlement.

"It is important to note that we are positioning the business to take full advantage of what we anticipate will be a rapid increase in cattle prices in the remainder of the year," Toms said in statement.

For the past two years cattle prices have tracked below a long-term trend line dating back to 1996, the company reported.

However, there has been a strong recovery in prices since June with prices rising to AUD3.53 a kilogramme in recent weeks from a fiscal first half range of AUD3.15 to AUD3.40, it said.

Among operating highlights for its branded beef products, the company said the restaurant and food service trade in Australia has flattened. Offshore demand for the branded beef is good, though constrained in the first half by a strong Australian currency, which has weakened sharply since mid July, it said.