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Fertoz confident 2020 growth will deliver solid tonnage with expanding network of distributor groups

The phosphate company recently appointed experienced fertiliser industry executive and chemical engineer Ron Wilkinson to its board.

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The company's objective is to become a growth-oriented agribusiness

Fertoz Ltd (ASX:FTZ) signed several strategic distribution agreements during the quarter, including with Pacific Recycling to supply powdered and granulated gypsum products, providing substantial exposure to the eastern Canadian organic sector.

The organic phosphate development company also expanded on its previous USA-focused deal with Humic Growth Solutions by signing a supply agreement and formalised a distribution agreement with Thompsons Limited, a dedicated organics business which deals in farm inputs across 12 branches in Ontario, Canada.

In June Fertoz appointed Ron Wilkinson as a non-executive director, who brings a suite of skills from his 20 years' experience in senior roles for Canadian-based fertiliser company Agrium, now known as Nutrien.

As president of Agrium’s wholesale business unit Wilkinson had direct profit and loss responsibility for annual revenues of more than US$4 billion and annual sales of 8 million tonnes, primarily into North American markets.

 

Fertoz executive chairman Patrick Avery said the organic agricultural sector continued to expand and Fertoz was strategically placed as a leading supplier of organic inputs, having developed the supply chain with leading distributor networks, significant stockpile tonnage and developing mine permits.

The company plans to begin mining high-grade organic phosphate within a month with approval now obtained from the British Columbia Government regarding its bulk sample permit for the Marten property within the Fernie BC leases.

Seasonal environmental monitoring at Marten is nearing completion and phosphate will be extracted based on sales forecasts.

Avery added that exploration studies across the large Barnes lease was continuing and the company expected to finalise all studies at Wapiti this summer for mining to begin in 2020.

READ: Fertoz signs multiple Canada-focused permitting and phosphate distribution agreements

Commenting on the strategic agreements inked during the quarter, Avery revealed that several more were in the works.

He said: “Having distributors throughout the farming regions of Canada and the US will enable us to get our products to farmers more quickly when growing conditions are best and we are working on more distribution agreements.

"We were also pleased to grow our volumes during the period with Nutrien, Tiger Sul, Thompson’s, Blairs and Anderson’s.”

READ: Fertoz highlights 2020 vision with investors during half-year reporting

Avery noted that Humic Growth Solutions was just finishing a processing plant expansion which would allow the company to ramp up its deliveries there.

He said: “The unseasonably adverse recent weather has thrown up challenges for everybody in the North American agricultural supply chain and Fertoz is no exception.

“However, we continue to deliver positive growth across all of our key metrics and we are pleased to say that despite enduring a record-breaking cold winter and wet spring … Fertoz now has many fall/winter contracts secured.

“The Fertoz business plan remains focused on becoming North America’s leading organic group in line with the strengthening trend of consumers towards organic food and investors focusing on companies with sustainable practices within agriculture.”

READ: Fertoz continues to develop phosphate operations targeting 30,000 – 50,000 tonnes in USA

Despite weather-related disruptions resulting in revised sales guidance of 15,000 – 20,000 tons for calendar year 2019, Fertoz had increased its sale force and the number and reach of its distributors.  

Avery noted: “While this is disappointing and outside Fertoz’s control, the pleasing aspect of 2019 is the expansion in the number of buyers for the company’s products – currently nine separate distributor groups – up from two in 2018.

“While our 2019 tonnage growth is less than originally forecast, it remains solid growth on the 2018 tonnage sold.

“The company’s expanding network of very high-quality distributor groups gives Fertoz confidence that 2020 growth, subject to favourable weather, will deliver solid tonnage growth on calendar year 2019.”

Next steps

Planned activities for the September quarter will focus on delivering value through several initiatives including marketing campaigns to boost awareness of Fertoz’s product range, particularly in the booming cannabis sector.

Fertoz will also work on obtaining more sales contracts with several new distribution and supply agreements with major partners to be incorporated into sales contracts for CY19.

Other initiatives continue to be developed that will further expand the product range and customer reach for Fertoz products as well as blends with partners’ products.

These include co-locating processed fertiliser at distributor sites to ensure same-day or next-day delivery and geographic expansion to the south to mitigate weather risks in Alberta, Saskatchewan and Montana.

Quick facts: Fertoz Ltd

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ASX:FTZ
Market: ASX
Market Cap: $13.51 m
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Fertoz is working to become the largest provider of organic inputs in North...

Fertoz (ASX:FTZ) Exec Chairman Pat Avery joined Steve Darling from Proactive Investors on Skype to chat about the company that specializes in organic fertilizer. Avery talked about the origins of the company and how they have grown this year in order to set them up for the future. Avery...

on 10/7/19

4 min read