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Heavy rain and flooding across north-western Queensland have hit three of Australian Agricultural Company Limited’s (ASX: AAC) properties, with the country’s largest beef producer bracing for a material hit to its bottom line from the natural disaster.
However, the company notes that with prime conditions across the bulk of its portfolio, the Queensland floods will not affect its ability to meet existing beef supply obligations.
Australian Agricultural Company (AACo), which manages about 456,000 head of cattle across 6.5 million hectares in Queensland and the Northern Territory, has identified the affected properties to be Carrum Station and Dalgonally Station, both located near Julia Creek, and Canobie Station, which is about 200km north of Cloncurry.
“Our immediate focus is on our people and the welfare of our animals,” says AACo in a statement to the ASX this morning.
“The full effects of the flood are yet to be determined and are being managed in real time.
“Management will continue to monitor the situation closely and take all possible steps to mitigate the impact on our people, cattle, land and operations.”
AACo, which operates 27 cattle stations, reports that its staff and their families on the three affected properties are currently safe.
The three properties hold about 55,000 head of cattle, or12 per cent of the company’s total stock, with AACo noting that this is a significantly lower head count than when the properties were impacted by the devastating floods of 2019.
AACo lost about 43,000 head of cattle across four properties during the 2019 floods which led to a $47 million loss from these operations in FY19.
“Any comparisons between the 2019 event and the current event should be approached with caution, due to current cattle valuations, operating practices, property and livestock conditions, weather and rainfall variations and seasonality,” says the company.
“At this early stage, as conditions are evolving and remain challenging, a credible assessment of the impact on livestock and infrastructure is currently unable to be undertaken - noting there is still the possibility of further wet season impacts.”
AACo notes that south-western Queensland and the Northern Territory, where most of its properties and cattle are located, are experiencing favourable rainfall for the season.
“The company remains able to fulfil supply obligations to its key markets in line with its strategy,” says AACo.
“Aligned with industry practice and given the prohibitive costs involved, AACo does not hold insurance for its herd and infrastructure for flooding events.
“Whilst the impact of the situation is continuing to be determined, the company’s balance sheet and financial position remain strong.”
AACo says that while it is still to assess the financial impact of the floods on its full-year earnings to 30 March this year, it is likely to be material.
Shares in the company were trading at $1.41, down 4c, at 10.14am (AEDT).
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