Canada & Australia: United Malt Group expects annual earnings to be hit by a range of costs
United Malt Group Ltd.'s annual earnings will be hit by a range of costs including from global supply-chain disruptions, tighter labor markets and drought in Canada, the MarketWatch reported on April 26.
The malt processor and supplier on April 26 said that delayed sales stemming from gummed supply chains would reduce its earnings before interest, tax, depreciation and amortization for the 12 months through September by about 8.0 million Australian dollars (US$5.7 million).
It also expects a A$13 million hit from software costs related to the implementation of its new tech platform, attributing the tech cost to tight labor markets. A shortage of skilled labor will restrict the benefit over FY 2022 of the company's so-called transformation program to A$4.5 million, compared with the A$30 million it hopes to achieve by FY 2024.
Stripping out the software costs, United Malt said it anticipates underlying Ebitda of A$57 million for its fiscal first half, and of between A$115 million and A$140 million over the full year.
The average analyst forecast for FY 2022 Ebitda of A$153.4 million, according to data compiled by FactSet.
United Malt said drought in Canada had reduced barley yields and quality, driving up FY 2022 production costs by between A$10 million and A$13 million. It has also had to import barley to Canada from Denmark and Australia, at an annual cost of between A$10 million and A$12 million.
Chief Executive and Managing Director Mark Palmquist said Canadian barley quality had further deteriorated since United Malt flagged the issue at its annual general meeting in February.
Sales volumes in United Malt's processing segment are expected to exceed those of FY 2021 as markets open and demand rises amid the easing of Covid-19 pandemic conditions. Yet elevated input costs will reduce annual Ebitda by about A$4 million, with price rises over the next nine months to reduce the impact in FY 2023.
More positively, demand for warehousing and distribution means underlying Ebitda from that division is expected to rise by about 14% in 1H, and by about the same amount over the full fiscal year.
United Malt will report its 1H results on May 17.
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