In­ter­na­tional in­flu­ence

SunRice rev­enue is up, but profit is down

Deniliquin Pastoral Times - - NEWS -

SunRice ended the first half of its cur­rent fi­nan­cial year with a net profit after tax which is 42 per cent lower than the same time last year.

The com­pany says the re­duc­tion is in­flu­enced by in­ter­na­tional fac­tors, and not the do­mes­tic is­sue still be­ing felt with NSW Mur­ray Val­ley rice­grow­ers hav­ing no ac­cess to gen­eral se­cu­rity en­ti­tle­ments to grow food.

Its half yearly fig­ures for fi­nan­cial year 2019 — to Oc­to­ber 31, 2018 — show a net profit after tax of $13.9 mil­lion.

The sig­nif­i­cant de­crease is de­spite an in­crease in rev­enue of seven per cent, to $582.9 mil­lion on Oc­to­ber 31, 2018.

While he has said all along that this fi­nan­cial year would be a chal­leng­ing one for the SunRice Group, CEO Rob Gor­don said the com­pany was still con­fi­dent of fin­ish­ing the fi­nan­cial year with a net profit after tax of up to $35 mil­lion.

How­ever, this would de­pend on the per­for­mance in key mar­kets, global rice trends and a num­ber of other fac­tors.

He said they are the same ar­eas which have af­fected profit in the first half of the year.

‘‘As ad­vised at the AGM in Sep­tem­ber 2018, fi­nan­cial year 2019 is an­tic­i­pated to be a chal­leng­ing year for the SunRice Group.

‘‘Pre­vail­ing global rice mar­ket trad­ing con­di­tions and ex­change rate move­ments, which are both be­yond SunRice’s con­trol, im­pacted on the Group’s half year 2019 rev­enue and profitabil­ity.

‘‘SunRice’s seven per cent rev­enue in­crease com­pared to half year 2018 was due to a com­bi­na­tion of fac­tors. In­ter­na­tional rice prices firmed dur­ing the pe­riod by around 30 per cent and ex­change rate move­ments en­hanced the value of Aus­tralian rice ex­ports.

‘‘De­spite stronger rev­enue, SunRice profitabil­ity was un­der­mined by sev­eral fac­tors.

‘‘The firmer rice prices that ben­e­fited rev­enue also in­creased the cost of some of SunRice’s key in­ter­na­tion­ally sourced ex­port va­ri­eties. In ad­di­tion, profitabil­ity was neg­a­tively im­pacted by the fall­ing value and lack of liq­uid­ity of the Pa­pua New Guinea Kina, as well as other gen­er­ally un­favourable for­eign ex­change move­ments com­pared to half year 2018.

‘‘Pleas­ingly how­ever, the Rice Food, CopRice and Ri­viana busi­nesses all ex­pe­ri­enced profitabil­ity growth dur­ing the half. CopRice per­formed par­tic­u­larly well, hav­ing ben­e­fited from the in­creas­ing de­mand for stock­feed with rev­enue in­creas­ing by 49 per cent.’’

SunRice’s out­look is that in­ter­na­tional rice prices are an­tic­i­pated to sup­port im­proved profitabil­ity for the in­ter­na­tional rice seg­ment in the sec­ond half of fi­nan­cial year 2019.

Help­ing in that re­gard is the com­pany’s re­cent pur­chase of new busi­nesses, in­clud­ing one which se­cures more rice from Viet­nam.

‘‘SunRice con­tin­ues to pur­sue strate­gic op­por­tu­ni­ties across the busi­ness, and dur­ing half year 2019 com­pleted two ac­qui­si­tions — the Roza’s Gourmet busi­ness to diver­sify Ri­viana’s pres­ence into spe­cial­ist chilled sauces and dips and a rice mill in the Mekong Delta prov­ince of Dong Thap that will pro­vide SunRice with a fully ver­ti­cally in­te­grated sup­ply chain in Viet­nam and a more stable sup­ply of rice.

‘‘Fol­low­ing the over­whelm­ing ap­proval of share­hold­ers at the AGM in Sep­tem­ber 2018, SunRice looks for­ward to list­ing on the ASX in early 2019 and the op­por­tu­nity this will pro­vide to raise eq­uity cap­i­tal in the fu­ture, so that we can con­tinue to pur­sue our 2022 Growth Strat­egy.

‘‘Our guid­ance for net profit after tax for fi­nan­cial year 2019 re­mains at be­tween $30 to 35 mil­lion.

‘‘De­spite poor milling yields dur­ing the pe­riod, the paddy price range to be paid by the rice pool for base grade medium grain (Reiziq) re­mains $360-$400/tonne.’’

Ju­lia Dunn, Nic­cola Stan­worth and Zali Pater­son en­joyed last year’s sport­ing pro­gram.

Rob Gor­don.

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