Namoi Cotton recorded a net profit after tax and rebate of $12.9 million for the half-year ended 31 August 2007 compared to the previous half-year’s result of $24.0 million.
The directors believe this is a sound result, achieved despite a considerable reduction in Australian cotton production and operational challenges associated with pressured trading margins and a historically high Australian dollar.
Namoi Cotton’s ginning and marketing segments operate on a seasonal basis with profits from operating activities recorded in the first half of the year and losses incurred in the second half of the year associated with the fixed costs of those segments.
The directors have opted not to pay an interim distribution (2006: 3.5 cents) and will consider a final distribution once the full-year result is finalised and objective quantification of 2008 crop production is confirmed.
Namoi Cotton ginned 397,000 bales of the 2007 crop (2006 season: 625,000 bales) representing market share of 30.2% (2006 season: 23.8%).
Effective off season maintenance programs, improved reliability and reshaped work systems facilitated a 7% improvement in ginning efficiency.
Namoi Cotton has implemented a capital management program for its ginning network whilst delivering industry benchmark services to growers.
Marketing volumes for the 2007 crop are currently 446,000 bales (2006 season: 703,000 bales) representing market share of 33.9% of the Australian crop (2006 season: 26.7%).
The increased market share is attributed to our regional presence, effective maintenance of grower relationships and diversity of marketing products The advantages provided by Namoi Cotton’s integrated rail and warehouse logistics network have facilitated 2007 crop shipments.
Our logistics business shipped 35% of the 2007-08 bales at half-year end, reflecting astrong forward marketing book.
Namoi Cotton Commodities Pty Ltd has traded soundly in its first six months of operation. The business has established a presence through offering grain, oilseed and pulse marketing alternatives for grower members.
Namoi Cotton has also expanded packing capabilities to further diversify income streams. The 2008 crop will be severely impacted by the ongoing drought conditions and reduced water allocation entitlements.
The majority of cotton growing regions have received limited rainfall in the past six months and major dams are approaching record low levels.
Whilst planting intentions will not be finalised until November, industry forecasts indicate that the 2008 crop will be substantially smaller than the 2007 crop.
Namoi Cotton remains committed to its strategic direction in the face of agronomic challenges by reducing reliance on irrigated agriculture, maintenance of improved market share and management of costs.
We will continue to deliver industry leading services and products to meet the requirements of our clients.
