MP Evans trumpeted a "competitive edge" to Australian cattle farmers over their US rivals as the plantations and livestock group forecast a "bright" future despite a sharp drop in profits.

Prospects for cattle industries both Australia, the world's second biggest beef exporter, and its biggest rival, third-ranked America, looked bright thanks to "heightened global demand" for the meat at a time when farmers have cut back herds.

Cattle numbers in both countries have suffered "significant downsizing" thanks to higher prices of grains used in feed in 2008 and, in Australia, drought.

However, while rains have helped Australia ranchers, American farmers retain an Achilles heel caused by their greater reliance on feedlots over pasture.

"US profit margins are therefore more sensitive to fluctuations in the price of grain, which provides Australia with a competitive edge," MP Evans said.

Still for sale 

The comments come at a time when Australia is losing market share to the US in many key market, such as South Korea, as restrictions on American supplies relating to BSE scares are lifted.

Nonetheless, prospects look "much brighter" for Australian cattle, MP Evans said, after a year when both of its Australian cattle farming investments, Napco and Woodlands, reported losses.

The sector was enjoying "one of the best seasons of the last decade", Peter Hadsley-Chaplin, the MP Evans chairman, said.

However, Woodlands remained for sale and, after disappointing sorghum and wheat crops from arable operations last year, was being focused on cattle fattening "to which it is felt the property is best suited".

Dividend maintained 

The group's palm oil operations also lost ground in 2009, with a rise in yields of fresh fruit bunches failing to make up for a slide in prices of the vegetable oil.

Group revenues slipped 6.6% to $28.4m, with underlying operating profits tumbling by 27% to $7.10m.

Earnings of $20.7m included contributions from non-controlled companies as well as adjustments to asset values, although they were less than half the $53.6m reported for 2008, when proceeds were swollen by sales of Malaysian palm estates.

Mr Hadsley-Chaplin said that the group's maintenance of its dividend at 7.0p a share, including the interim payout reflected the "confidence" with which group viewed its prospects.

Market reaction 

The results prompted Panmure Gordon analyst Graham Jones to lift by 4 cents to 28.3 cents his forecast for MP Evans' earnings per share this year, noting the "Australian rainfall benefiting the cattle business… and volumes continuing to build in the new [oil palm] plantations".

The group restated a "buy" rating on the shares, with a price target of 450p.

Nonetheless, MP Evans shares closed down 5.7% to 350p in London.