The 107 dairy farmers supplying Tatua get the industry’s highest annual payout, again, plus My Food Bag mulls a stockmarket listing

Tatua shines amid Covid fallout

Morrinsville based dairy co-op Tatua has once again delivered an impressive result for its 107 farmer-shareholders reporting record pre-tax earnings of $151 million before retentions for the 12 months ended July, up from $140 million a year earlier, as revenue rose 4.7 percent to $381 million.

The cooperative processed 15.2 million kilograms of milk solids, up from 14.5 million kgMS in the 2019 season, and confirmed a cash payout of $8.70/kgMS. This compares to the $7.14/kgMS paid to Fonterra suppliers and more than the $7.30/kgMS paid to Synlait Milk farmers. Tatua paid $8.50/kgMS in 2019 and maintains its track record for having the highest annual payout in the dairy sector.

Tatua retained $19.1 million, or $1.26/kgMS, to reinvest and said it remained cautiously optimistic about the year ahead.

My Food Bag mulls possible NZX listing

Meal-in-a-box company My Food Bag is weighing an initial public offering on the NZX.

The company confirmed it had appointed PwC to make recommendations on possible listing options or outright sale of the business.

Started by former Telecom CEO Theresa Gattung, Cecilia Robinson, chef Nadia Lim and husband Carlos Bagrie in 2012, the founding shareholders collectively own around 27 percent of the company. The Waterman Fund is the majority shareholder, a stake it acquired in November 2016.

Potential buyers were being signed to confidentiality agreements this week after the company asked PwC to test interest in a sale, according to the Australian Financial Review.

The company has been an obvious beneficiary of online shopping trends that have resulted from Covid-19, with the business achieving significant growth this year.

Currently My Food Bag employs around 200 staff across three facilities, two in Auckland and one in Christchurch.

Serko’s surprise capital raising

Online travel expense management company Serko revealed news of an unexpected $55 million equity raising, placing the company in a trading halt yesterday.

The company plans to raise $45 million from an underwritten placement to institutional investors and $10 million from a non-underwritten share purchase plan for existing investors.

The placement’s final price will be set through a bookbuild process but is underwritten at a minimum price of $4.35 per share, a 3.5 percent discount to yesterday’s closing price of $4.51.

The news comes as a surprise, given the company is already sitting on a cash pile in excess of $33.6 million with a relatively low cash-burn rate but Serko says it sees a number of opportunities coming down the pipeline when travel resumes and is positioning itself accordingly.

Serko is targeting $100 million in revenue over the medium term, although the pandemic is likely to have slowed the timing of achieving that goal. Revenue in the past six months is estimated at less than $5 million.

However, chief executive Darrin Grafton said the pandemic created opportunities for the company to accelerate the development and rollout of Serko’s technology to its reseller partners.

“In recent months, we have received inbound demand from these organisations as they consider, plan and request accelerated timetables to onboard new customers, deliver new features and expand existing partnerships,” Grafton said.

Steel & Tube braces for tough 2021

Steel & Tube Holdings CEO Mark Malpass told shareholders attending the company’s AGM yesterday he is expecting a recession next year and planning accordingly, despite recent trading being better than expected.

Malpass said construction activity continues to be impacted by softer vertical building activity. However, he said the company was seeing continued strength in residential activity, civil and other works.

Steel & Tube reported a $60 million net loss for the year ended June with pre-tax, interest and depreciation earnings coming in marginally above break even.

“The economic environment remains uncertain with the continuing slowdown in some areas due to reduced business confidence post-covid and the pre-election uncertainty. We expect there will be some deterioration in economic conditions later in the year and into the second half of full-year 2021,” Malpass said.

The company currently has zero debt.

Steel & Tube shares have under performed the market this year and are currently down 41 percent year-to-date.

The shares closed yesterday unchanged at 60c.

New report reveals a sobering outlook for global aviation

Air New Zealand CEO Greg Foran’s sombre outlook at the company’s AGM this week has been backed by a new report that paints a bleak picture of the state of the global aviation industry.

The report predicts the collapse in aviation caused by the coronavirus pandemic could wipe out 46 million jobs worldwide, highlighting just how damaging a prolonged downturn in air travel and tourism is for the global economy.

The Air Transport Action Group (ATAG), a Geneva-based coalition of aviation industry organisations, said in the report published Wednesday that more than half of the 88 million jobs supported by aviation could be lost at least temporarily as a result of the pandemic. Many in the industry expect air travel will not fully recover to last year’s level until 2024.

Job losses at airlines, airports and civil aerospace companies alone could amount to 4.8 million by the beginning of next year, a 43 percent reduction in employment from levels before the pandemic, according to the report, which is based on an analysis by Oxford Economics.

Another 26 million jobs could go in air travel-related tourism, with about 15 million more at risk in companies that sell goods and services into the air transport supply chain or to aviation industry workers.

Airline jobs could fall by more than a third, or 1.3 million, while economic activity supported by aviation could shrink 52 percent, translating to a loss of $1.8 trillion in global GDP.

Tokyo Stock Exchange fault prevents trading for the first time

A hardware failure caused the Tokyo Stock Exchange to completely halt trading for the entire day yesterday, the first time such an outage had occurred.

The exchange said the technical problem was due to an issue with hardware. A backup device failed to work, making it impossible to distribute market information.

The issue also appeared to affect smaller Japanese stock exchanges in Nagoya, Fukuoka and Sapporo, which share the same trading system as the TSE.

In a country well known for its precision and efficiency, the day-long halt is significant for a stock market that is worth about US$6 trillion – the world’s largest after the United States and mainland China.

The TSE said it was replacing the hardware “to ensure normal trading” from today.

The suspension is “regrettable,” said Katsunobu Kato, Japan’s Chief Cabinet Secretary. The country’s financial regulator has ordered the exchange and its operator, Japan Exchange Group, to investigate the cause of the glitch.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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