Wednesday, April 24, 2024

Farmlands looks to the future

Neal Wallace
Farmlands has successfully overcome a year of disruption to record an improved $5.7 million net profit after tax (npat) for the 2020-21 financial year.
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Farmlands chief executive Tanya Houghton says covid-19 created a year of numerous issues and difficulties, but the decision was taken to invest extra working capital in inventory.

Farmlands has successfully overcome a year of disruption to record an improved $5.7 million net profit after tax (npat) for the 2020-21 financial year.

This was based on $2.7 billion turnover and revenue of $1.1b for the year, a result which chair Rob Hewett labelled “a pass mark and little more”.

For the 2019-20 year, Farmlands reported npat of $4.7m on turnover of $2.6b and revenue of $1.1b.

In the year under review, $94.2m was paid to the co-operative’s 75,000 shareholders in monthly rebates, discounts and loyalty reward redemptions, compared to $91.1m a year earlier.

Chief financial officer Kevin Cooney says while it was great to record a profit, the co-operative needs to do better and it has several initiatives to achieve that.

Cooney, who was acting chief executive for part of the 2020-21 financial year, says some of those gains will come from the rollout of Braveheart, its three-year business transformation technology programme.

“Adapting any business to working successfully on a new company-wide system is a major challenge. The system itself is only the first step,” Cooney said.

Benefits will also come from making better use of Farmlands scale, working with suppliers and with shareholders seeking innovation and solutions to challenges such as low-emission farming, using data, growing their business and safety.

Chief executive Tanya Houghton agrees, saying the performance of the business can improve through greater efforts to leverage its scale and contributions from Braveheart.

Farmlands is testing aspects of Braveheart with shareholders, which it hopes will improve the ability of farmers to use data to assist with planning.

She says initially many of the gains from Braveheart will be in back room efficiency that will initially be out of sight of customers and shareholders.

There have been other new innovations in the past year.

“We have a new online shop and our e-commerce platform has come a long way in a short space of time. This is vital, especially during lockdowns,” Houghton said.

“We have built our plan for this year around three things: safe and engaged people; unbeatable customer experience that earns trusted partner status with our customers; and delivering our budget.

Houghton says covid-19 created a year of numerous issues and difficulties, but the decision was taken to invest extra working capital in inventory to ensure customers and shareholders had access to products.

Supply chain issues are expected to remain an issue for another two years, which will continue to impact importers and exporters alike.

Chair Rob Hewett paid tribute to staff for their response during covid-19 and says given the virus is likely to continue to be disruptive, the board has decided not to distribute a bonus rebate this year to protect against any unforeseen downturn.

Hewett is confident the rebate will return as the co-operative evolves under new leadership.

“Next year, our co-operative turns 60. It is a timely reminder that we have served, supplied and supported generations of Kiwi farmers and growers and their businesses,” Hewett said.

“We were created to disrupt, compete and challenge. Our ambition is to continue to reinvent, to be relevant and to help our customers succeed.”

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