Farmlands announces $17.1m profit

Farmlands announces $17.1m group net profit and $11.9m (gross) shareholder distribution

Farmlands announced a $17.1m group net profit before tax and rebates for the 2022 financial year at its Annual General Meeting, held in Farmlands’ new flagship Ashburton store on Thursday, 3 November.

This strong profit performance, which is 34% up on the previous year, has resulted in Farmlands planning to return an $11.9m gross shareholder distribution. This will mean $8.6m is being returned to shareholders after tax. The distribution will be the first return to shareholders delivered in four years. It is almost double the gross distribution of $6.2m provided in 2018.

“Farmlands is returning to a position of financial strength – during a time when New Zealand agriculture is faced with a lot of rapid disruption,” said Rob Hewett, Farmlands Chair.

“We have a clear plan on how we will deliver greater value to our shareholders over the long-term. We are focused on our core role of providing critical inputs to New Zealand farmers and growers and embracing the growing new lifestyle customers groups connected to the land.”

The group result reported above includes the Farmlands fuel business which became part of a new joint venture, Fern Energy shortly after the end of the financial year. Group revenue grew to $1.25b (an increase of 15%) and total group turnover exceeded $3b for the first time. Group earnings before interest, taxes, depreciation, and amortizsation (EBITDA) was $51m – an increase of 9%.

“This result was built on a combination of good gross profit growth and tight cost controls in a challenging operating environment. We looked at how we could improve the way we did business and implemented change quickly to deliver this year”, said Tanya Houghton, Farmlands CEO.

“We are now focused on medium and long-term growth, ensuring Farmlands is sustainable and delivering value to New Zealand agriculture well into the future.”

The Farmlands team understands that it needs to balance how it provides value to its shareholders.

“We work for all our customers to provide great product range and pricing, specialist sector expertise, and excellent customer service. We are also available when and where our customers need us – through our field teams visiting farms, technical experts, weekend trading in many of our stores and online shopping,” said Ms Houghton.

The monthly rebates provided through Farmlands Card and in-store shareholder purchases is the most significant and regular way Farmlands delivers value. In 2022, the co-operative returned $94.3m in monthly rebates during the year – an increase of $5m on the year before.

An end of year profit distribution is the other important way Farmlands supports funds being reinvested in New Zealand Agriculture.

“We are working to ensure that Farmlands is consistently profitable, and, therefore, returning regular distributions to our shareholders from here on in,” added Mrs Houghton.

“As we continue to manage industry uncertainty, we do not expect straight line growth in distributions – there will be some bumps. As our business improvements start to have a positive impact over the next two to three years, we expect to see our profitability and shareholder returns increase.”

About Farmlands’ new Ashburton store

On Friday, 28 October Farmlands opened its new flagship store in Ashburton – the first new store in seven years. Farmlands Ashburton is a new concept store, that has been specifically designed to meet the needs of farmer and grower customers, and the expanding lifestyle property owner community in and around Ashburton.

It provides an enhanced retail experience compared to other Farmlands stores, with a community space, a new FeedBarn nutrition concept and even a pet wash.

The Ashburton team are experts in providing rural supplies advice and are available seven days a week to meet the needs of their customers.