Top beef cuts will stay as a focus for AACo
PASTORAL firm Australian Agricultural Company remains committed to becoming a leading luxury branded beef producer despite heavy hits to its bottom line.
AACo chief executive Hugh Killen told shareholders in Brisbane yesterday that the company's luxury branded beef was fetching good prices in Asia even as the firm's overall financial performance remained unsatisfactory.
"Our overall business and financial performance is not where we want it to be," Mr Killen told the 194-year-old company's annual general meeting.
"That's why we are making the tough decisions."
Brisbane-based AACo reported a loss of $102.6 million this year as it faced increased competition, dry conditions and rising costs.
The company earlier this year mothballed an unprofitable meat processing plant in the Northern Territory that employed 200 people.
Mr Killen stressed the focus on luxury branded beef for high-end restaurants was working, with its Westholme and Wylarah products performing strongly in Asian markets including Singapore and Taiwan.
"Our customers are the chefs who buy our product," said Mr Killen.
"This customer-focused brand and marketing strategy is central to our future revenue and earnings growth."
AACo chairman Donald McGauchie said the company was experiencing "green shoots" of recovery after four years of hard work transforming itself from a traditional pastoral company.
"Our current journey commenced in 2013 with the decision of the board to transform AACo into a luxury branded beef business," Mr McGauchie said.
"The origins of that decision came from walking into Harrods in London and seeing our beef being sold for 200 pounds a kilo.
"When we saw that, we knew what was possible."
Mr McGauchie said the company's balance sheet remained strong and the decision to close the Livingstone Beef abattoir had positive influence on profitability and cash flow.
"AACo is well-positioned to now realise the margin and profit upside offered by our luxury branded beef strategy," he said.
AACo shares dropped 1.56 per cent to $1.265 yesterday.