WIDESPREAD unease about long term prospects for some irrigation industry ventures across the Murray-Darling Basin, hasn't distracted farm supplies business, Ruralco, which has managed to launch its own flourishing new water business.
The new ProWater Nationwide irrigation equipment group has been one of several notable performers contributing to Ruralco's 24.3 per cent rise in net profit after tax to $15 million for the 2010-11 trading year.
Prominent results in the year to September 30 included a 23pc rise in gross profit from the company's rural supplies business, a 24pc lift in wool and livestock profit and a 20pc increase in grain profits driven by Ruralco broker, Agfarm.
Favourable seasonal conditions across much of eastern Australia triggered a rise in merchandise and fertiliser sales, while strong sheep and cattle prices were underpinned by good feed and water supplies.
Ruralco's reported earnings before interest and tax (EBIT) jumped 41pc to $36.4m and debt shrank 62pc.
The diverse agribusiness, which includes the CRT farm supplies stable, will pay a final dividend of nine cents a share (fully franked), which follows an interim dividend also of nine cents.
Managing director, John Maher, said this year's launch of the retail water equipment group to provide specialist sales and advisory services to irrigators and mainstream water hardware users had quickly grown to 27 member businesses and increased its buying power with suppliers as it built sales volumes with key manufacturers.
While abundant rainfall looked set to continue to subdue water trading prices for temporary water transfers, and permanent water entitlement prices were steady, he said Ruralco's water enterprises continued to grow and win project business.
ProWater had rapidly strengthened the professional positioning of its members in their local water markets, also providing other Ruralco businesses with a competitive alternative to their traditional suppliers of water-related products.
Some businesses involved in the ProWater group are also involved water trading.
"Ruralco is committed to the water and emerging environmental sectors and is well placed to capture market share growth in the future," Mr Maher said.
He said the "professionalism, drive and enthusiasm" of the whole company's many joint venture partners, member businesses and staff "never ceased to impress" and this year's results were particularly pleasing given variable trading and seasonal conditions during the year, including the "significant" cost of the Indonesian live cattle trade ban.
Mr Maher highlighted the company's solid balance sheet with sales up 11pc to break through $1 billion in turnover while debt was just 15.7m - down from 41.3m the previous year.
With debt to equity gearing now down from 26pc to 9.4pc, he said the company intended to maintain a prudent capital discipline.
Ruralco intended to be in a strong position to withstand any further credit market disruptions and have capacity to capture new business opportunities which may arise.
However, a change to centralised debtor control had identified a greater portion of bad and doubtful debts within the business which increased by $1.7m on last year.
Mr Maher was cautiously optimistic about the solid momentum being maintained in most of Ruralco's business units, bolstered by good rain helping soil moisture and delivering favourable conditions for most of the company's activities Australia-wide.
Southern Australia had generally experienced good cropping seasonal conditions on the back of above average summer rain, while Western Australia's dry start to the year turned around with reasonable rainfall.
On the back of the return to big grain cropping seasons, Ruralco's relatively young grain marketing business, Agfarm, was achieving substantial volume growth by offering farmers an independent marketing service via multiple traders.
"Farmers are liking the grain brokering model. They like the fact the Agfarm rep offers a choice of buyer options and isn't pushing just one trader's business," Mr Maher said.
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