A $36.7 million write-down in the value of its stock has pushed the end-of-year accounts of fertiliser co-operative Ballance Agri-Nutrients into the red.
Reflecting on a year of "roller-coaster international fertiliser prices", chairman David Graham said the company's balance sheet took a hit as it shielded shareholders from fertiliser price volatility.
Ballance reported an after-tax loss of $3.2 million in the year to May 31 after the write-down, and has told shareholders it would not pay a rebate or dividend.
"Earnings do not support either form of distribution," Mr Graham said.
The trading profit of $30.7 million before write-downs was 61% lower than the $78.6 million recorded the previous year, reflecting lower prices and margins as the company passed on the benefits of tumbling prices to shareholders as quickly as it could.
Prices soared to record levels early in the financial year because of international demand, but then started to fall because of the recession.
Mr Graham said on average every tonne of Ballance fertiliser sold in the year under review cost Ballance clients $700, compared with $400 the previous year.
Higher prices saw revenue grow 27% from $651 million to $828 million, but sales volume was down 28% at 1.115 million tonnes (1.54 million tonnes in 2008).
Mr Graham said farmers told the company they wanted lower fertiliser prices rather than an end-of-year rebate, and he calculated that shielding shareholders from extreme price fluctuations benefited them to the tune of $76 million.
"We acted on this feedback, selling fertiliser at times below cost to meet our co-operative's primary objective of delivering fertiliser to our shareholders at an affordable price - well below the prices paid by other farmers around the world."
Looking ahead to the current year, Mr Graham said Ballance would rebuild equity and strengthen its balance sheet.
"We don't expect much change in sales volume in 2010 compared with 2009, but we can expect an improvement in profitability and cash flow.
"Because of the product inventory write-downs, we have started the current financial year with a clean slate and anticipate reporting a strong bottom line this time next year," he said.
Ravensdown, Ballance's arch-rival in the fertiliser industry, reported a full-year profit of $36 million before tax and rebates.
