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Why Australian Agricultural Company Ltd shares just dropped 10%

Debt

Shares in cattle farmer Australian Agricultural Company Ltd (ASX: AAC) shed 10% this morning after the group reported a statutory EBITDA loss of $36.5 million after a write down in the value of some of its cattle inventory. For the six month period ending September 30 2017 operating EBITDA came in at $16.1 million on revenues of $197.2 million.

The group’s operating EBITDA margin also fell to 8.2% in a result management blamed on higher input costs (including feed) across a business now covering the entire beef supply chain.

The business still carries net debt of $360 million on a gearing (net debt / net debt + equity) ratio of 26.4%, which is up from 24.4% as at March 31 2017. Finance costs for the half-year came in at $13.5 million.

The group also flagged other “external challenges” included increased exports from U.S. markets and a higher Australian dollar. No dividend was declared and the group has cash in hand of just $5.4 million as at September 30 2017.

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Returns as of 6th October 2020

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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