Norco flood loss: $27.5m loss for northern dairy co-operative
Norco may have been hit hard by the Lismore floods, but $46m in government grants is helping it rebuild farmer equity.
Lismore’s February floods have cost Norco dairy co-operative $41m in damages, as revealed in its 2021-22 annual report released to farmers this week.
By far the greatest loss was the damage to the co-operative’s Lismore ice-cream factory, which was undergoing a $30m upgrade at the time.
All up Norco recorded losses of:
• $24.5m to its ice-cream business
• $9m in stock losses
• $7.5m in employee expenses and clean-up costs
Those losses led to Norco recording a $27.5m net loss - before recognition of tax loss benefits.
However, the co-op recently won $46m in NSW and Federal Government grants to help rebuild its flood-damaged ice-cream factory.
The total cost of the rebuild is $59m, which should revive Norco’s equity position, which had slumped from $80.7m prior to the floods, down to $61.2m in its aftermath.
“The 28 February 2022 will be a date that will go down in history for our co-operative, our members and many of our staff due to the impacts of a devastating natural disaster,” Norco chairman Michael Jeffery said in his report to farmers.
“While our sites in Lismore could withstand a one-in-100-year flood event, with some short-term minimal impact, this flood event was more than two metres higher than any other flood in recorded history and it caused significant damage and losses at many of the co-operative’s facilities.”
Despite the floods, Mr Jeffery said Norco was still able to inject $4.5m to boost the farmgate milk price during the year, to aid members’ recovery from the floods and cover surging costs of production.
Norco chief executive Michael Hampson said the co-operative had built-in resilience over recent years, by reducing “net debt to $4.7m at 30 June 2022, the lowest level in many years”. “This is a considerable improvement on the 2019 financial year end, where net debt was $36.5m – this clearly points to the resilience now created in the co-operative, and the benefits of the change to our new operating model that we commenced in 2020,” he said.
He said the Norco brand continued to grow in Queensland and NSW, with an annual national retail sales growth rate of 5.3 per cent in 2021-22.
“When considering the white milk category declined at 2.1 per cent, this growth shows the focused activity of the sales and marketing team to communicate the point of difference of the Norco brand to consumers.
“It also shows that consumers do understand that supporting a 100 per cent farmer-owned co-operative is a unique value proposition.”