Australian Agricultural Projects Posts $873K Cash Surplus and Stable Orchard in Q3
Australian Agricultural Projects Ltd has delivered a solid quarterly update with strong sales from its 2025 olive oil harvest and a stable orchard condition, while navigating rising water costs and international price pressures.
- Nearly all 2025 olive oil harvest sold at strong domestic-linked prices
- Orchard condition remains sound with biennial cycle affecting bud development
- Restructured maintenance program focusing on harvesters and external contractors
- Net operating cash surplus of $873,000 recorded for the quarter
- Water prices rising amid dry conditions; supply agreement extension underway
Operational Stability Amid Seasonal Cycles
Australian Agricultural Projects Ltd (AAP) has reported a steady quarter ending 30 September 2025, with its orchard maintaining sound condition as post-harvest activities progress smoothly. The company’s focus on operational efficiency is evident in its recent restructuring of the maintenance program, particularly around its two harvesters. By leveraging specialist external contractors, AAP aims to streamline internal operations while retaining critical expertise.
Strong Sales Despite Market Headwinds
All but a small parcel of approximately 18,500 litres of olive oil from the 2025 harvest have been sold, with prices holding firm despite a softening in international bulk olive oil markets following the record highs of 2023. AAP’s pricing is linked to the retail price of packaged Australian extra virgin olive oil sold through major supermarkets, providing some insulation from global bulk price fluctuations. However, management acknowledges that increased import competition and declining global bulk prices could exert downward pressure on domestic retail prices.
Looking Ahead, Supply Agreements and Orchard Cycles
The company is finalising an extension of its Olive Oil Supply Agreement with Cobram Estate Limited, which expires at the end of the 2025 season. Bud development within the orchard aligns with its natural biennial production cycle, indicating an "off year" with flowering expected in November and fruit set in December. A detailed review of the 2026 harvest outlook will follow fruit set, providing investors with a clearer picture of future production.
Financial Health and Cash Flow Management
Financially, AAP recorded a net operating cash surplus of $873,000 for the quarter, supported by cash receipts of $2.26 million. Operating payments remained consistent with budget expectations. The company reduced its core lending facilities by $175,000 during the quarter and anticipates maintaining positive operating cash flow through the December 2025 and March 2026 quarters. A temporary cash flow deficit is expected in June 2026, coinciding with harvest-related expenses.
Environmental and Cost Pressures
Climatic conditions remain notably dry across the irrigation district, with water prices rising toward the end of the previous season and continuing upward in the current season. Storage levels at Lake Eildon, the primary water source, stand at around 55.6% capacity. These factors present ongoing cost pressures that management is monitoring closely.
Bottom Line?
As Australian Agricultural Projects navigates seasonal cycles and market pressures, the upcoming supply agreement extension and 2026 harvest outlook will be key to watch.
Questions in the middle?
- Will the extension of the supply agreement with Cobram Estate secure stable pricing amid global market volatility?
- How will rising water costs impact operational expenses and profitability in the coming year?
- What is the anticipated scale and quality of the 2026 harvest following the biennial cycle’s off year?
