Farmlands Annual Results Show Healthy 'Green Shoots' In Rural Sector

Green shoots of confidence and prosperity are apparent in New Zealand’s rural sector, despite ongoing economic challenges around the globe.

Peter Ellis, Chief Executive Officer of rural retailing co-operative Farmlands Trading Society, says the last twelve months has seen confidence increase for most agricultural producers.

“This time last year I was hopeful that – with the onset of spring and greater stability in the New Zealand economy – confidence would return to the agricultural sector. I’m pleased to confirm that there is cautious optimism out there, and this optimism is reflected in our annual results.” 


In the last financial year, Farmlands experienced impressive growth, delivering some record
performances:


• annual turnover increased by 22 per cent ($123 million) to $683 million
• pre-tax profits before loyalty rebates increased by 63 per cent ($2.2 million) to $5.8 million
• rebates to members increased by 23 per cent ($8.1 million) to $44.2 million
• shareholder numbers increased by 5 per cent (1,300) to 27,000
• year-end loyalty rebates increased by 65 per cent ($2.1 million) to $5.3 million.

 

Peter Ellis says underpinning these figures was growth in Farmlands retail business of 25 per cent, or 19 per cent on a ‘same store’ basis, after removing the impact of the two new stores in Putararu and Opunake which opened during the year.

“Also included in these results is our rapidly growing Skeltons horticulture offering, which is
being leveraged across the Farmlands platform in all the major horticulture growing areas in
the North Island. We now have nearly 20 Skeltons technical advisors working in the field, to
support our shareholders.”

Peter Ellis is pragmatic about the challenges Farmlands, farmers and others in the rural sector face, so in a precautionary move has made provision for bad and doubtful debts. There is also an increasing focus on driving efficiencies into the processes and systems that support Farmlands business activities. 


“We believe that is vital to support the sustainability of the business in a rural merchandise
market that will continue to consolidate, resulting in a smaller number of larger players.”


Farmlands has plans in place to become a larger player itself, with three more stores set to
open in the next six months, taking the total number of Farmlands outlets to 47.

“We have just announced a new store will open in Inglewood in Taranaki next January, so after Helensville, Huntly and Inglewood are up and running there are only three more locations in our pipeline to complete our target of 50 stores by the end of 2012 and thus deliver geographic coverage of the North Island.”

Farmlands Board Chairman Lachie Johnstone is heartened by the trading year’s robust results; while there is usually some variation between quarterly reporting periods, this year each quarter tracked in line with expectation or better.

Mr Johnstone says a long term strategic approach has been critical to Farmlands success.

A little over three years ago we set some targets. We believed that the sector faced further
consolidation, and if we were to ignore the opportunity to take part in this activity,

Farmlands risked becoming irrelevant. It had the benefit of a structure and platform that could enable it to become the market leader it is today.”

Along with planning at a strategic level, both Mr Johnstone and Mr Ellis attribute much of
Farmlands success to the people at the grassroots level – the 500 plus staff who deliver the
Farmlands promises of value and service to shareholders on a daily basis.

Peter Ellis says the Farmlands team represents an important part of the organisation’s
continuous improvement strategy, and are pivotal in supporting the recovery of the country’s rural sector.

“Despite continuing turmoil in many of the economies in the Northern Hemisphere, I hope that the green shoots of increasing confidence and prosperity will continue to develop across the New Zealand primary sector, and at Farmlands we are looking forward to a verdant future.”