AACo posts profit despite a tough year

Australia’s biggest beef producer, AACo, has reported an operating profit of $24.4 million for the 2020/2021 financial year
AACo full year 2020/2021 result
AACo has managed to turn a full year profit despite drought, floods and the COVID pandemic. Image courtesy of AACo

The company credited record-high cattle prices and an improved result from sales of its branded beef for the result.

However, JobKeeper payments were also a significant contributor, accounting for $6.7 million of the operating profit.

Managing Director and CEO Hugh Killen said operating through the uncertainty of the last financial year was challenging.

“Food services face ongoing disruption across our key markets across the world,” he said.

“These risks continue despite progress with virus suppression and vaccination around the world.”

Mr Killen said the Australian cattle industry is also being impacted by other external forces, including reduced herd sizes as a result of droughts and flood.

He said a number of AACo properties are seeing below average rainfall and the Gulf properties are still recovering from flood, with limited pasture response.

“These headwinds have started to impact our meat production in FY21 due to our average F1 Wagyu lifecycle length of 3.5 years from conception through to backgrounding, feedlots and processing,” Killen said.

Mr Killen said notwithstanding these headwinds, progress had been made on the branded beef strategy, which remained fundamental to AACo and would continue to help the company navigate through the uncertain environment.

“Being able to make progress in a year that was so heavily affected by outside factors shows that it’s the right approach and should remain central to our activities,” he said.

“Our strong brand portfolio and distribution partnerships have helped us connect with new customers and respond to changes in our markets in FY21 and has helped us deliver an 8% improvement in the average meat sales price per kilogram.

“We’ve also focused this year on strategic market allocation and adapting our channel strategy to satisfy the rise of at home consumption and the home chef.

“In a further sign of progress, Westholme and Darling Downs now represent 74% of AACo’s branded meat sales.”