Richmond lowers forecast after stop-start season

By PHILIPPA STEVENSON agriculture editor

Meat company Richmond looks to have given away the year's profit after paying out more than $2 million in an interim dividend only to see second-half expectations founder.

The listed company said yesterday that it was revising down its full-year forecast result and now expected only to break even in the year to September.

Richmond reported a $1.5 million loss for the six months to May but had expected to turn that around in the second half of the year.

Its board approved an interim dividend of 5c a share, or $2.05 million, from retained earnings, which was paid on June 21.

Yesterday, just over a month after shareholders got the payout, the company said the improvement had not come about, the result primarily of lower than expected stock flows.

Chairman Sam Robinson said that when the board decided on the dividend it had thought things were going to be better than it now expected.

"But, nevertheless, one of the reasons for paying the dividend is that the meat industry is a cyclical industry. It does have good years and bad years and we need to look through one year to the average payout over a number of years.

"Last year we paid out $4 million out of $20 million, which is a very low payout ratio. This year we are obviously going to have a much higher payout ratio."

The Meat and Wool Economic Service said that next season's stock numbers would be the same as this year's, possibly indicating more difficulties ahead for Richmond.

But Robinson said the pattern of stock flows was as important as total numbers.

"The pattern this year has been anything but normal. In a normal season you would tend to get some seasonal peak, which enables meat companies to get all their chains up and running and the well-oiled Machine really firing.

"We just didn't get that opportunity this year. It was very much a stop-start season."

A better financial result could have been achieved with a better stock flow even with the same kill, said Robinson, who acknowledged that there was no such thing as a normal season in the meat industry.