Adelaide, South Australia
November 26, 2007
Leading agricultural company
ABB Grain today announced a
net profit after tax of $7.3 million for the full year ending 30
September 2007, which is consistent with ABB’s recent profit
revision.
The company will also pay a final fully franked dividend of 5.0
cents per share to shareholders on 21 December 2007 (record
date: 6 December).*
In making today’s announcement, ABB Grain’s managing director
Michael Iwaniw said the 2006 drought – the worst in 25 years –
had impacted significantly on ABB’s earnings.
“There’s no doubt the drought, and the volatile market activity
that followed, has had a significant influence on our net
profit. Our 2006/07 grain receivals of 1.8 million tonnes were
just over a quarter of the previous year’s 6.6 million tonnes,”
Mr Iwaniw said.
“However, a strong performance from our expanded malt
operations, and growth in non-grain activities and value adding
services have been real positives to come from the year.
“Our supply chain activities were boosted by an increase in
throughput of non-grain materials including mineral sands, salt,
gypsum and fertiliser. ABB has a well maintained network of
infrastructure in place to be well positioned to capitalise on
the mining boom in South Australia.
“Grain containerisation activities have also increased in line
with greater industry demand, with our ProGrain subsidiary being
at the forefront of this growth.
“Despite the record low receivals, in the past five years ABB
has been able to lower its break-even tonnage figure due to
excellent cost management and efficient operations. This has put
us in a stronger position for the years ahead.
“Manufacturing efficiencies, effective marketing and a full year
of operation from our expanded Perth malthouse have seen the
total net profit before tax for malt manufacturing jump to $31.2
million compared to $12.9 million in 2006. ABB’s marketing
division were able to ensure supplies of malting barley for the
malthouses despite the drought, and supported by the experience
of our logistics team who moved considerable volumes of grain
interstate, stocks were positioned to achieve the most efficient
use of quality stocks.”
Mr Iwaniw said that ABB had incurred a loss from its grain
marketing activities, which reflected the severe drought and
unprecedented market volatility in the latter part of the year.
This included $15 million lower pool-related income than the
previous year. He said that since September 30 reporting the
marked to market had moved in the company’s favour,
substantially improving its position.
ABB’s diversifying business operations were enhanced throughout
the year by the purchases of wool broker and marketer Adelaide
Wool Company, rural products, services and agency business
Wardle Co. Pty Ltd and seed commercialisation company
Graintrust. ABB also expanded its global footprint via a
Ukrainian joint venture.
Mr Iwaniw said the company was now in its best position yet to
capitalise on other non-grain activities to help diversify the
business.
“With the establishment of a Pastoral and Rural Services
division within ABB, which returned a $2.5 million profit before
tax, we are looking to provide a greater amount of services to
growers. Synergies between ABB’s existing customer network and
our varying services on offer are already being realised, and
this provides real growth opportunities for the future.”
In making the results announcement Mr Iwaniw also applauded the
efforts by ABB staff in implementing a ‘drought plan’ during the
year, which resulted in considerable savings for the company.
The plan included reducing costs for casual staff, not opening
41 receival sites, investing only in ‘stay in business’ capital,
and providing staff with flexibility through innovative leave
alternatives.
Future Outlook
Looking ahead, Mr Iwaniw said the next 12 months for ABB would
see further value adding to the company.
“We are looking to extend our New Zealand operations to
capitalise on the burgeoning compound feed industry. Our
Ukrainian joint venture with agro-industrial group Soufflet
complements our Australian export program and will allow us to
grow in the EU region. Both of these activities will strengthen
our presence in the global grains industry and, coupled with our
knowledge and experience, will drive further value for the
company.
“Our pastoral and rural services division should continue
building momentum as we look for further opportunities and
possible acquisitions. We also anticipate continued growth from
our ProGrain container activities in light of this year’s
deregulation of the wheat container market, which will be
supported by our investment in container facilities.”
*ABB’s dividend reinvestment plan (DRP) will operate for the
December dividend at a 2.5% discount to the weighted average
price of ABB shares sold on the ASX in the five business days
immediately before, including and after the record date.
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