Media Release: 18th November 2024

Farmlands Delivers Better Value To Rural Sector Despite Tough Market

Farmlands, New Zealand’s largest rural supplies co-operative, has announced a $14.3m net loss for 2024. While disappointing as a result despite a very hard year of effort at the Co-operative, it’s an annual result that’s in line with a promise and strategy to deliver greater value to Kiwi farmers and growers and to invest in strengthening the Co-operative itself, while also managing through a tough market environment.

“We know that when our farmers and growers have a tough time, we are likely to feel the impact. It’s been one of those years. We recognised this early and adjusted our short-term strategy quickly,” says Farmlands Chair, Rob Hewett.

The loss resulted from lower revenue (down $68.2m) reflecting farmer and grower spending and was exacerbated by a one-off accounting adjustment to previously-recognised tax losses of $12.3m. Farmlands focused on providing more value back to customers through price and rebates throughout the year as well.

“If we remove the impact of the tax adjustments, our net loss would have been $2m and slightly below the previous year,” adds Rob. “When you then consider that we have paid $92m in shareholder rebates, it demonstrates the underlying strength of the Co-op and our ability to support farmers and growers through these tough times.”

The value delivered is particularly evident in Farmlands’ core rural supplies business where the Co-op provided upfront pricing benefits for customers of $44.1m, an increase over 2023.

“Our efforts to improve pricing on rural supplies have put an additional $6.9m back in the hands of Kiwi farmers and growers,” says Farmlands CEO, Tanya Houghton. “This has been made possible through efficiencies gained from our supply chain transformation, careful inventory management, supplier negotiations and tight operational cost controls.”

“Farmlands is becoming a much stronger co-operative than it was 2-3 years ago because of deliberate decisions we’ve made. Other examples of this growing underlying strength are an improved cash position year-on-year, acquisitions like SealesWinslow and new partnerships such as Fern Energy.”

Farmlands improved its operating cashflow by $27m, from negative $5.1m last year to positive $22 million.

“We’ve worked hard to right-size our operations, ensuring we run as cost-effectively as possible,” said CEO Tanya Houghton. “While keeping costs down, we’ve invested more in our teams, so we can continue to provide knowledgeable service to shareholders.”

Farmlands supply chain transformation and direct-to-farm services are now supercharged by FarmlandsPRO, launched in June 2024 as a self-service tool that simplifies on-farm orders and offers better pricing. It is also supported by the opening of the first Regional Hub in Southland and the launch of North and South Island Distribution Centres – aimed at improving how rural supplies move through Farmlands’ network to get onto farm quickly, at the lowest cost.

Farmlands has now significantly improved stock availability (now over 95%), and this is being reflected in increasingly positive customer feedback. The Co-op’s first range of direct-sourced products sold rapidly at competitive prices and clearance stock exceeded sales expectations, reducing planned write-offs.

A new Horticulture Hub in Hastings demonstrates Farmlands’ commitment to better serving specific regional horticulture needs, providing tailored support and expertise to local growers.

Tanya also highlights the value of the SealesWinslow purchase from Ballance. “This partnership retains SealesWinslow in New Zealand co-operative ownership, leveraging Farmlands’ scale to generate real returns on investment and to support local farming needs. We are already seeing efficiency gains through having a national network of mills, boosting our production volumes.”

Rob adds, “While it’s been a challenging year, these results show our strategy is working. Farmlands is making the bold moves and developing the innovations that’ll see us boosting the productivity and profitability of Kiwi farmers for at least another 60 years.”

Financial Results Summary:

$2.5b in Turnover
$740.3m in Revenue
$158.9m in Gross Profit
$20.4m in Operating EBITDA
$14.3m Net Loss After Tax
$21.9m in Operating Cashflow
$92m in Total Shareholder Rebates
$44.1m in Rural Supplies Rebates

Our annual turnover and revenue decreased compared to the previous year, reflective of our farmers and growers carefully managing spending in challenging market conditions – which is to be expected.

Our income statement shows an improvement in gross profit; this is impacted by the $20.8m stock provision included in the 2023 financial result and released in 2024 with the true underlying gross profit down on the previous year in line with the top-line sales decrease.

A tax expense of $12.3m inflated the net loss, which is explained in detail in the financial section of the accounts. The $27m improvement in operating cash flow reflects the hard work and benefits of Farmlands’ supply chain transformation. To read Farmlands’ Annual Report, visit: https://report.farmlands.co.nz/home-2024/