Australian Agricultural Company (ASX:AAC) share price slips on full-year results

The Australian Agricultural Company Ltd (ASX: AAC) share price is sliping today following the company’s full-year results. Here’s the highlights.

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beef cattle in stockyard

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The Australian Agricultural Company Ltd (ASX: AAC) share price is edging lower during mid-afternoon trade. This follows the company’s release of its full-year results for the 2021 financial year.

At the time of writing, the Australian cattle producer’s shares are fetching for $1.20, down 1.6%.

How did Australian Agricultural Company perform for FY21?

Investors are hitting the sell button in light of the company’s challenging COVID-19 economic environment.

For the period ending 31 March 2021, the Australian Agricultural Company reported a fall in meat and cattle sales. The business experienced lower calving in 2018-2020 due to a prolonged drought and the Gulf flood event, which impacted 2021’s result.

Meat sales dropped to $200 million, reflecting a 29.6% decline from the $229.6 million achieved in the prior corresponding period.

Cattle sales on the other hand, also sunk to $65.5 million, tumbling 39% from $104.5 million recorded in FY20.

Overall, total sales came to $265.5 million, signifying a 68.6% downturn on the $334.1 million made this time last year.

Operating profit lifted to $24.4 million, with $17.7 million included pre-JobKeeper. This reflected a jump from the $15.2 million received over the prior comparable period. The improved metric was attributed to higher meat sales per kilo, up 8% which offset the 19% fall in meat volume sales. In addition, management carefully reduced costs across the business which supported the strong performance.

As a result, statutory earnings before interest, tax, depreciation and amortisation (EBITDA) came to $99.3 million, an increase of $19.2 million over FY20.

Net tangible sales per share jumped to $1.75, compared against $1.53 from the end of March last year. This was driven by improvements in the livestock market values and in the property portfolio.

Australian Agricultural Company noted it retains a robust balance sheet, with comfortable headroom under existing bank covenants. The closing cash balance stood at $8.9 million, however, the business has over $1 billion in net assets.

Management commentary

Australian Agricultural Company managing director and CEO, Hugh Killen said:

The fundamentals of the business remain strong and we’ve made progress with our brands, which is encouraging considering the ongoing challenges that we will navigate over the coming few years.

The last 12 months have been dominated by uncertainty across many industries and ongoing disruption across our key markets around the world.

Importantly though, our herd rebuild has commenced, with a 47% increase in calves in FY21 compared to FY20.

Australian Agricultural Company share price summary

Over the past 12 months, Australian Agricultural Company shares have risen just under 10%. The company’s share price reached a high of $1.24 in early April before profit-taking swooped in. However, its shares have rebound and are within a whisker of breaking new territory.

Australian Agricultural Company has a market capitalisation of roughly $729 million, with around 602 million shares outstanding.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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