Australian Agricultural Company Limited (ASX:AAC), commonly known as AACo, is one of Australia’s oldest and largest integrated agribusinesses, established in 1824. AACo specialises in the production and marketing of premium beef, particularly Wagyu, through its extensive network of properties and facilities.

The company operates several major assets, including vast cattle stations across Queensland and the Northern Territory, such as Brunette Downs and Goonoo Station. AACo’s divisions encompass breeding, growing, and finishing cattle, as well as meat processing and distribution.

The company’s brands, including Westholme, Darling Downs, and 1824, are recognised globally for their high-quality beef products. AACo leverages its advanced supply chain and distribution network to serve markets in Australia, Asia, North America, and Europe.

Overview of Financial Performance

Australian Agricultural Company (AACo) reported operating profit of $58.4 million and operating cash flow of $27.1 million. The growth in meat sales volumes was a significant driver of this result, marking AACo’s highest operating cash flow and second-highest operating profit since 2017. This year also represents the third consecutive full-year operating profit above $50 million.

AACo’s overall revenue for FY25 reached $387.9 million, which is $52 million higher than the previous period. This increase was driven by a $25.2 million rise in meat sales revenue and a $26.6 million increase in cattle sales revenue compared to the prior corresponding period. The company’s disciplined approach to cost management played a crucial role in supporting these operating results.

Despite inflationary pressures, AACo managed to control costs effectively, with the cost of production per kilogram produced increasing by only 5%. This reflects both the impact of inflation on inputs and a higher proportion of cattle moving through the finishing stages of the supply chain.

AACo reported total assets of $2.43 billion, up from $2.36 billion; total liabilities at $885.3 million, up from $847.6 million bringing net assets to $1.54 billion. They also reported a gearing ratio of 23.9%, and $600 million total committed borrowing capacity, with $172 million unutilised.

Statutory Performance and Herd Valuation

AACo’s herd remained largely consistent at 455,852 head. However, the unrealised mark-to-market value of the herd declined by $4.7 million, contributing to a statutory net loss of $1.1 million vs a loss of $94.6m in the previous period. This is a significant improvement compared to the $149.4 million reduction in the prior period.

The company’s statutory EBITDA also showed positive growth, reaching $56.3 million compared to a negative $87.9 million in the previous year. Additionally, net tangible assets (NTA) per share increased by 2% to $2.55, reflecting a $45.9 million rise in total property and infrastructure values.

Market Conditions and Product Performance

The average sales price for AACo’s Wagyu meat decreased by 10% to $17.85 per kilogram due to challenging market conditions in the first half of the year. Factors such as prolonged herd liquidations in the US and increased local supply in Korea impacted prices.

However, the second half of the year showed positive signs, with the average meat sales price improving as supply dynamics and global inflationary pressures eased.

Commercial Strategy and Brand Performance

AACo’s long-term commercial strategy has positioned the company well amidst variable global conditions. The company’s ability to leverage its distribution network and strategically allocate products has helped protect prices in key regions.

New branded menu placements in established restaurants and expanded offerings in gourmet marketplaces highlighted the period’s commercial performance. AACo’s suite of brands, including Westholme, Darling Downs, and 1824, continues to align with consumer and market expectations, driving growth and maintaining brand presence in key markets.

A 32% increase in Westholme’s volumes lead to a 17% increase in sales, as global market dynamics resulted in reduced prices in some markets. A targeted expansion of Darling Downs contributed to a 19% uplift in volume and 11% increase in sales value. 1824 experienced a 9% increase in price alongside significant growth in sales value (455% increase) and volume (446% increase).

Investment and Sustainability Initiatives

The strong operating cash flow enabled AACo to reinvest in the business, enhancing supply chain resilience and improving station infrastructure. Sustainability initiatives, such as the Zero Net Emissions Ag CRC and the company’s first soil carbon project, are now embedded into business-as-usual activities.

AACo’s sustainability program has led to improved land conditions, increased brandings, and enhanced cattle productivity.

Global Operating Environment and Strategic Focus

AACo’s global operating environment remains dynamic, influenced by various factors. The company’s high-quality integrated supply chain and strong global network of distributors have positioned it well to respond to emerging conditions.

Despite uncertainties in global beef sales, the demand for Australian beef is expected to remain strong in key markets such as Korea, North America, and Europe. AACo’s strategy refresh, focusing on Better Beef, Partner and Invest, and Unlock the Value of the Land, aims to innovate and grow through the supply chain while aligning with the company’s strengths.

AACo’s Managing Director and CEO, David Harris, expressed pride in the company’s achievements and the efforts of its teams across properties and around the world. The company’s refreshed purpose, vision, and values will guide its future growth, building on the positive results of FY25.