Sales jump not reflected in Richmond result

For the six months ended March the main board newcomer increased pre-tax operating profit from $14.7 million last year to $14.9 million while sales jumped from $573.5 million to $696.5 million.

Although the company managed to boost net profit from $9.8 million last year to $13.3 million the figure was helped by two non-recurring items.

"Richmond's result benefits from a non-recurring contribution ($1.5 million) arising from its shareholding in New Zealand Lamb Co. (North America) Limited and the reversal of a litigation provision ($1.6 million) with respect to disputed assessments from the IRD," the company says in a statement.

"The latter arose from the company's investment in Trial Run Holdings Limited, and was concluded in the company's favour last November."

The half-year result appears to back up concerns voiced in March by Richmond chief executive, John Loughlin, when he told a Federated Farmers conference that the company was yet to deliver to his satisfaction in terms of margin.

Chairman Sam Robinson has described the current market environment as challenging, although he says the interim result is pleasing in view of the differences in stock flows compared with last year.

"Despite the slower flow of livestock, increased cow retention compared to last year, and a high degree of marketplace volatility, Richmond has produced a strong result.

He says challenges arising from food concerns in Europe caused by BSE and Foot & Mouth and the MAF vet strike made the first half of the year "that little bit harder."

Mr Robinson also says the board is currently considering initiatives aimed at lifting operating performance at a number of sites.

"We have before us a number of earnings-enhancing capital expenditure opportunities that will further unlock value for both shareholders and suppliers going forward.

"These will not influence the financial result for the second half of the year, but will position Richmond more strongly for the future."

Meanwhile the company says there is every sign the second half will be less challenging than the corresponding period last year, which was hurt by a drop in stock flows.

It is also on target for a full year tax paid profit of $19.4 million as forecast in its February capital notes prospectus.

A fully imputed dividend of 5 cents per share has been approved.

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