Murray Irrigation has achieved a break-even financial result for the first half of the 2016/17 financial year.
This result was presented at the February 2017 board meeting and represents a significant turnaround on worrying financial results announced in October last year.
Before its annual general meeting in November, the company announced it posted a $75 million loss in its main business which included $66.5 million through an impairment of assets.
While indicating it still expects an overall loss this financial year, the company says this new break-even result was achieved with a focus on a number of sustainable changes across the business and some one-off initiatives over the past six months.
Murray Irrigation chairman Mark Robertson said the company has been working toward the result for three years.
‘‘The company is an important part of the local community it serves, and we see our long term sustainability to be closely linked to the ongoing prosperity and success of the agricultural sector and the broader region,’’ he said.
‘‘We are pleased that the turnaround plan we put in place three years ago, under Bruce Simpson’s chairmanship, which focused on the three drivers of price, volume and cost, is now starting to deliver with this positive financial result.
‘‘A lot of hard work has gone into re-aligning PIIOP Round 2 to deliver a modernised network on budget, on time and with improved efficiency in the delivery to our customers. Our new customer approach is starting to make an impact on an individual farm level and re-connecting Murray Irrigation back into the business of agricultural outcomes. And our relentless reduction in costs is making the business much more accountable for the bottom line.’’
Murray Irrigation chief executive officer Michael Renehan said the result was achieved through a strong focus on reducing operational costs across the business as it moves from manual to automated operations.
‘‘We have been particularly pleased how our staff have really got behind a number of challenging outcomes to deliver this result,’’ he said.
However, Mr Renehan cautioned that while this outstanding half year result was a strong indication of what the business can achieve, the company was still forecasting an overall loss for the full financial year.
‘‘We are extremely pleased to report a break-even result for the first half of the financial year, however we still have a lot of work ahead of us to maintain this momentum.
‘‘To help us achieve this, we are going out to our customers directly to hear what they see as important as we transform the business,’’ he said.
Murray Irrigation will host a series of customer feedback groups throughout March to collect feedback on a range of topics which will inform the company’s decision making process.
Mr Renehan said some of the recent cost saving measures include a reduction of the Murray Irrigation vehicle fleet, re-negotiated existing supplier contracts as well as the implementation of a competitive procurement process.
‘‘All these initiatives are building in a lower cost-base as we leverage off the new technology currently being installed,’’ he said.
‘‘Our business is currently going through a transformation. We are adopting cutting edge automation technology to deliver water to all our customers more efficiently, while at the same time transitioning our maintenance and engineering teams to reliability-centred operation of our assets. PIIOP Round 3 will link our outlet upgrade program with our main channels to extract further efficiencies in operating a fully automated system.
‘‘To achieve this outcome while maintaining financial discipline has been a credit to the Murray Irrigation team.’’
According to Mr Renehan, the financial result has also benefited from the impairment of assets determined in the FY 2016 results, where the depreciation charges are now more aligned to the water volumes delivered through the system.
‘‘The high allocation of water has been a positive as we are now delivering more water on-farm, but the impact of this increased volume will come through in the second half of the financial year. Indeed, water volumes were actually in line with last year due to late start to the season,’’ he said.
Mr Renehan said other key business activities have also helped achieve the successful financial result.
‘‘The delivery of environmental water and the Snowy Advance project have significantly increased revenue for the company.
‘‘Coupled with a price increase of 7.8 per cent last year, this result indicates what can be done in this business to turn the company around.’’
Murray Irrigation will provide a full 2016/17 financial year report at the company’s Annual General Meeting, to be held late this year.