Ridley Corporation forecast a continuation in its recovery, fostered by a dairy revival and fresh feed contracts, as it unveiled a return to full-year profit and its first dividend rise in four years.

The Australian feed and salt group, which has activist investor Guinness Peat as its biggest investor, announced earnings of Aus$29.1m for the year to the end of June, rebounding from a Aus$39.5m loss the year before, the company's first slide into the red in a decade.

While sales fell by 11.0% to Aus$728.0m, dented by a "significant drop" in takings from dairy farmers, profitability was enhanced by a cost cuts programme which has closed peripheral feed mill capacity, and centralised sales and procurement operations.

"Ridley has delivered a positive and transparent result for 2010," the group said, flagging "continuing improvement" at its agribusiness unit, which accounts for the bulk of company revenues.

The division's profits lift had been driven by "widespread efficiency improvement, continued focus on margin management, and annualised reductions in manufacturing and overhead costs".

Dairy depression 

And the group forecast that a series of long-term contracts signed in both its feed operations and its Cheetham salt business would "deliver bottom line improvements" early in its new financial year.

Further ahead, "the progressive recovery of the dairy sector is expected to deliver a return to traditional volumes and returns" for a segment which has historically been a big source of business, but where sales had fallen 24% by volume to 215,000 tonnes in the year to June.

"The dairy sector has been severely depressed," Ridley said. Besides the global slump in milk prices last year, some Australia's dairy sector has been hurt by drought which prompted herd reductions.

Board changes 

The results, which also saw Ridley raise its full-year dividend to 7.25 cents per share, come as the group prepares for the retirement of its long-standing chairman, Dr John Keniry, in November after 16 years in the role, and 20 years on the board.

The company in June appointed two fresh non-executive directors, Dr Robert van Barneveld, a feed researcher, and Dr Gary Weiss, a director at Guinness Peat.

Ridley shares closed 0.4% higher at Aus$1.235 in Sydney.