SunRice revenue is up, but profit is down
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.