Australia: ABB forecasts AU$16m–AU$19m net profit despite drought
Leading Australian agribusiness ABB Grain Ltd forecasts a net profit after tax of between AU$16m–AU$19m* for its current financial year, according to ABB’s media release, February 26.
ABB Grain managing director Michael Iwaniw told shareholders attending today’s annual general meeting in Adelaide that ABB could not escape the country’s worst drought in 25 years.
“However, despite the disastrous season ABB is still forecasting a net profit for 2006/07, which demonstrates the company’s diversification strength,” he said.
“ABB has also instigated a comprehensive drought plan with targeted savings of AU$7.5 million (before tax) by the end of this financial year.
“Our malting arm, Joe White Maltings, is currently operating at full capacity and has now increased its annual national malt production to approximately 500,000 tonnes, following the expansion of the Perth malt house last year.
“With the increase in barley prices there has also been an increase in malt prices, enabling Joe White Maltings to make a solid contribution to our profit forecast.”
“We’re expecting a strong performance from our trading group which has been doing business in all states of Australia and has been buying a range of grain and selectively selling to export and domestic markets.
“We’re also continuing to expand our international trading operations, which involves trading more third origin grain.”
ABB Grain continues to diversify its activities in an attempt to generate maximum value from its supply chain, evidenced by the recent establishment of a pastoral and export (PEX) division that will be responsible for wool trading, agchem, fertiliser and financial products.
“We’re expecting a positive contribution from this group in the current financial year but we’ll begin to see the real benefit from this group in the following year, positioning ABB for further growth in the years ahead,” Mr Iwaniw said.
“Despite the strong performance of some of our divisions and establishment of the PEX group, aspects of our business are volume based, most notably our grain receival and financial services activities.
“As a result, both of these areas will be severely impacted by the drought.
“Looking ahead, ABB will continue to identify growth opportunities, in fact our organic growth target, adjusted for seasonal impacts, is 10 per cent per annum.
“We can continue to capture some of this organic growth in our current supply chain. Non-grain commodities shipped through our terminals totalled 2.5 million tonnes last financial year and we are looking forward to growing significantly from this base in the years ahead.”
*The profit forecast is subject to sales and shipping volumes and market conditions.
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