RTC Agribusines

12 Aug, 1999 07:01 AM

WHILE careful not to provide shareholders with unrealistic expectations at last week’s annual meeting, RTC Agribusiness general manager David Kilpatrick urged shareholders to be patient as the company embarks on a restructuring process that will see it become a major stakeholder in the WA agribusiness sector. The company experienced an operating loss before tax of $1.85 million for the 12 months ending December 31, 1998, compared with a $453,000 operating profit for the previous period. During this time, the company increased its regional branch network to 11 centres through the establishment of businesses in Northam, Esperance and Kojonup, and expanded its agency network to 30. However, these initiatives, which positively contributed to the company’s market positioning and image, were not sufficient in generating substantial profitability in the short term. “These results and the financial position of RTC at the end of 1998 made it imperative that we identify and bring to fruition an opportunity to merge or aggregate RTC’s business with another suitable and complementary agribusiness organisation in order to improve our economies of scale,” RTC Agribusiness chairman Max Cameron said. Mr Cameron said a downturn in wool prices since November 1997, together with costs associated with expanding the service base, directly affected the company’s poor performance. To diminish the impact of those circumstances on the business, RTC has rationalised its wool marketing activities through an arrangement with Standard Wool Australia that involves the contracting out of its wool handling and storage facilities to the company. “We expect that changes in our wool handling activities, together with an anticipated recovery in the insurance and real estate arms of the organisation, will produce a significant turnaround in operating profits in the second half of 1999, which we believe will continue and strengthen in 2000,” Mr Cameron said. “This will be achieved through improved operational efficiencies, the enhancement of product and services range and increased financial activities.” Initially pessimistic after the company’s trading results for the previous financial period, shareholders showed their support towards the newly appointed Mr Kilpatrick, who presented a no-nonsense approach to the challenges ahead. “I have a tough job ahead of me, but I am confident that the businesses purchased through the merger will considerably add to the net profitability of the company,” he said. “We will proceed to create and implement solid growth strategies for each core operation of the business and believe that, once these have been put in place, we will be in a strong position to maintain a consistent and profitable base for future operations.” Mr Cameron, who expects the merger to be finalised in August, said it was necessary to address the future business strategies of the company and ensure there was an appropriate management structure to address ongoing management requirements and restructuring which might arise from the merger transaction. nHow the GST works, see farm business section, starting on page 22. (source: http://fw.farmonline.com.au)