The Australian Agricultural Company Ltd (ASX: AAC) share price plummeted 12% today, down to a 15-year low, after the beef producer announced that the Queensland floods have taken a heavy toll on the company’s livestock and infrastructure.
While an accurate assessment of the damage is not yet possible due to persistent flood waters, the impact on the company’s FY2019 results is expected to be significant. The once-in-a-century deluge has seen four of AACo’s 21 properties severely affected.
The Wondoola station, located 700km west of Cairns, has been hit the worst. Its herd of 30,000 head of cattle is expected to suffer “extreme” losses.
In a statement, the company said: “Our immediate focus is on our people, the welfare of our animals and the tight knit communities in which we operate. The full effects of the flood are being managed and measured in real time.”
On the opposite end of the spectrum, below-average rainfall and extreme heat are affecting many of AACo’s other properties located in south-western Queensland and the Northern Territory. As previously signaled, these conditions will substantially increase operating expenses, affecting profitability.
More positively, the company said: “The current operating conditions are not expected to affect the company’s ability to fulfil supply obligations or the rollout of its branded beef strategy, which continues to be a key focus. While we are still assessing the impact of this tragic situation, our balance sheet and financial position remains strong.”
Today’s decline saw the AACo share price down more than 15% so far in 2019.
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