Agribusiness Ruralco has issued a profit warning in the wake of low rainfall across Australia. Source: AAP
LOW rainfall across most of Australia will probably slash agribusiness Ruralco's profit in the first four months of its financial year by up to 70 per cent.
Ruralco managing director John Maher says a lack of rain across most of Australia's key agricultural regions has reduced demand for agricultural chemicals.
Lower demand for restocking livestock has also affected livestock prices.
Ruralco warned on Monday that underlying earnings for between last October and January would be 40 to 50 per cent lower than the same four months a year earlier.
Underlying profit - before non-recurring items - was expected fall 60 to 70 per cent from $11 million previously.
Reported net profit for the half year to March 31 was also anticipated to be break even.
"Profit lost over the first four months of the year will be difficult to recoup," Mr Maher said in a statement."
"However, a normal autumn seasonal break leading to solid winter crop plantings, mildly strengthening livestock prices, flow-through benefit of structural savings and part-year contributions from recent acquisitions is expected to lead to a significantly improved trading performance in the second half of the financial year."
Shares in Ruralco slumped 23 per cent, or 6.9 per cent, to close at $3.08.
Ruralco said a re-evaluation of the company's 12.04 per cent stake in agribusiness Elders, and higher interest costs would also affect the half-year result.
Mr Maher said average sheep prices had fallen by about 30 per cent and cattle prices were down about 11 per cent.
Sales of rural supplies had fallen about five per cent as hot and dry conditions had reduced the need for weed, pest and disease management products.
Ruralco will report its half-year results on May 21.
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