Ruralco takes fresh $3.2 million hit on card system

Ruralco services Mid Canterbury. Photo / Supplied

Ruralco has taken a fresh $3.2 million hit on its card system, fully writing off the asset and pushing the Mid Canterbury co-operative to a net loss.

Still, the Ashburton rural supplies co-operative reported its second consecutive trading profit of $690,000 in its 2026 financial year.

Ruralco – which formerly
traded as Ashburton Trading Society – operates throughout Mid Canterbury with three stores and more than 3000 shareholders.

Two years ago, the co-op took a $4.71m impairment on intangible assets, which included the card system.

Its value was based on a nationwide growth strategy that ultimately lacked full board support and was replaced with a locally focused approach.

Ruralco’s customer base is heavily concentrated in Mid Canterbury, which is dominated by dairy farming as well as arable.

Another hit

In its 2026 annual report, it said the board had decided to fully impair the system because it was no longer fit for purpose and ongoing development and maintenance costs posed a risk to the business.

“The system was not built to match the current pace of technology and detracts from Ruralco’s core function of being a farm supplies business.”

Rapid changes in technology since its last impairment, with a greater understanding of the limitations of the system, meant a full write-off of the system was “justifiable and a responsible approach at this time”.

Income of $1.4m had not been realised for the past three years, along with expenses valued at $800,000 for underpaid GST over the same period.

This year’s impairment pushed the co-op to a net loss of $2.5m, down from a profit of $1.25m last year, with adjusted earnings before interest, tax, depreciation and amortisation steady at $900,000.

It had turnover of $265m, up from $259m in 2025. It did not pay a rebate.

Chair David Carter and chief executive Tony Aitken have simplified the co-op’s operations, returned to its core business and focused on Mid Canterbury.

Carter and Aitken said the second trading profit was further evidence its “disciplined re-set of the business is working, as Ruralco maintains a position of fiscal stability and strength, building on last year’s positive financial result”.

“We are committed to lowering the cost of your farm inputs, with our emphasis being on lowering prices for everyone throughout the year rather than achieving a profit for a rebate.”

It had become more price-competitive, an approach that also encouraged competitors to lower prices.

Ruralco’s debt dropped $2m to $8.3m, as it pushes to become debt-free.

Aitken said the past 12 months had been marked by continued efforts to minimise expenses, reduce debt, and put strategies in place to increase sales and profitability as part of its re-set of the business for long-term sustainability.

“The result is a positive sign of continued confidence in the Mid Canterbury based co-operative.”

The card

Like other rural merchants, Ruralco offers a credit card to its customers with discounts offered at certain retailers.

Carter and Aitken said during the year, there had been a concerted effort to return Ruralco to being a shareholder-owned business.

“Over the past couple of decades there have been initiatives that have allowed people to have a Ruralco Card without becoming a shareholder. As we focus on providing maximum benefits for our shareholders, it has been pleasing to see cardholders choosing to convert and become shareholders.”

The pair said while it would continue to focus on managing expenses, areas of expenditure had been delayed and needed to occur in the coming year.

“These will be funded from cashflow rather than from borrowing. This includes an upgrade and the implementation of a future-focused ERP (Enterprise Resource Planning) system which will support the integration of our core business processes in one unified platform.”

That replaced its current system which was “significantly outdated, and has hindered data capture and reporting across the whole team”.

Farmlands is due to report its results before the end of the month.

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