Australia: ABB Grain’s profit hit a record $66.7 million in FY 2006 ended September 30

Leading Australian agribusiness ABB Grain Ltd announced November 27 a 60% lift in its annual net profit after tax (NPAT) to $66.7 million for the year ended 30 September 2006 (figures in AU$ unless stated).

Full year NPAT of $66.7 million – at high end of forecast; fully franked dividend of 16 cents per share, taking full-year dividend to 30 cps; total operating revenue in excess of $1.1billion (excluding pools).

ABB Grain managing director, Michael Iwaniw, said the record result, which was at the high end of the profit forecast of $65-67 million, reflected the company’s success in national growth and diversification.

“Increased marketing activity, higher grain receivals and an improved second-half performance by our nationwide malting arm, Joe White’s, contributed significantly to the full year result, backed by steady growth from our ProGrain and fertiliser businesses,” he said.

“Strong performance from our supply chain division during the year saw receivals into our sites last harvest reach 6.6 million tonnes, a 57% rise on the 4.2 million tonnes in 2004/05. We’ve continued to build on efficiencies in our grain handling activities, and developing new income streams, such as mineral sands via Port Adelaide, to increase use of our sites.

“Another highlight for us was in the marketing area, where we have been actively increasing our presence both in the eastern states and Western Australia. ABB traded a record amount of wheat during the year and, at the invitation of the Federal Government, in March established the Wheat Australia consortium with Graincorp and the CBH Group, which involved exporting 350,000 tonnes of wheat into Iraq.

“Our Joe White Maltings subsidiary, following a disappointing first half, improved both sales volumes and margins in the second half of the year. A major highlight for our malt operations was the commissioning of the Perth malthouse expansion, which has been fully operational since June.”

He cautioned that the full year results reflected the 2005/06 grain harvest, and did not take into account the current 2006/07 harvest, which was seriously affected by poor growing conditions that were experienced by most of the nation.

“ABARE’s drought update, released a month ago, revealed that the national wheat crop is forecast to be 9.5 million tonnes this harvest and the national barley crop is forecast to be down 64 per cent from last year to 3.6 million tonnes; Primary Industries SA (PIRSA) has estimated SA’s total harvest this year will be approximately 3 million tonnes,” Mr Iwaniw said.

“As a sign of our ongoing confidence in the future of the industry, ABB will continue to invest in major developments with the Outer Harbor grain export terminal due to be completed in December next year.”

Mr Iwaniw announced ABB would pay a final dividend for 2005/06 of 16 cents per share fully franked on 21 December 2006 (record date: 11 December). This dividend brings the full year total to 30 cents per share, compared to last year’s total dividend of 17 cents per share. The dividend reinvestment plan will once again be fully operational.*

In line with usual practice, a profit forecast for the 2006/07 financial year will be released at ABB Grain’s annual general meeting on 23 February 2007.

The financial year 1 October 2005 – 30 September 2006 is the first full year to be reported under the AIFRS reporting standards. The comparatives for 2005 have also been restated under AIFRS transition requirements.

It should be noted that under the new Australian International Financial Reporting standards (AIFRS), grain trading results are reported on a mark to market basis which results in greater volatility in reported performance.

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