Australia: ABB Grain set to meet profit forecast

Australia's biggest exporter of barley, ABB Grain Ltd, says it is on track to meet its annual profit forecasts and is well positioned to become a global player in grains handling and marketing, The Sydney Morning Herald posted May 29.

South Australian-based ABB, which handles other grains but mostly barley, has booked a first half net profit of $44.82 million - up 24 per cent on the prior corresponding period.

ABB managing director Michael Iwaniw said the result was excellent given a lower-than-expected contribution from the company's malting operations, which was affected by lower margins and sales volumes.

"The outlook for the full year is on track subject to sales and shipping volumes, prevailing market conditions and the impact of reporting under the Australian equivalents to the International Financial Reporting Standards," Mr Iwaniw said.

ABB has said it expects a net profit, before goodwill amortisation, of $65 million to $67 million this financial year.

Mr Iwaniw said that ABB had performed strongly in the areas of storage, handling and marketing in the first half.

"Grain receivals for the 2005/06 season were 6.6 million tonnes, compared to last year's receivals of 4.2 million tonnes," he said.

The outlook was very good for the 2006/07 crop (of barley and other grains) in South Australia.

Mr Iwaniw said ABB, in conjunction with GrainCorp and CBH, had also succeeded in putting together its first shipment of wheat for export to Iraq - 350,000 tonnes - and was negotiating for another parcel.

ABB is also looking at potential grain-handling opportunities on the east coast of Australia and overseas, particularly in Eastern Europe.

"We are having some discussion with people in east Russia and potentially in Iraq once some of the hostilities cease," Mr Iwaniw said.

There were also growth opportunities in the marketing of wheat and other grains in Australia and overseas.

"We do intend to become a global player in grain," Mr Iwaniw said.

ABB was "well positioned" to become a major player in wheat marketing, should there be changes made to wheat exporter AWB Ltd's monopoly rights to export wheat as a result of the Iraqi kickbacks scandal.

The company is also looking to develop new income streams, such as handling of non-grain commodities like mineral sands and woodchips through its silos and shipping terminals in South Australia.

Mr Iwaniw noted that the malt business worldwide was in a depressed state at the moment but there were signs of recovery.

Some malt houses had gone bankrupt and were up for sale, which provided potential growth opportunity.

ABB said it achieved higher-than-expected benefits from its merger with fellow South Australian-based grain firms Ausbulk Ltd and United Grower Holdings in late September 2004.

"We did announce that we believed we could obtain $10 million in after-tax synergies with the merger of the companies ... we believe that we've achieved in excess of that ... and there is a lot more that we can do," Mr Iwaniw said.

The capacity expansion of the Joe White Maltings Forrestfield malthouse in Western Australia was in the final stages of commissioning, and the Outer Harbour development in South Australia was on target for completion in December 2007.

ABB's revenue for the six months to March 31 was $579.97 million, down 10 per cent on the same half last year.

The company declared a fully franked first half dividend of 14 cents per share, up from eight cents last time.

ABB Grain shares rose 20 cents to $7.50 on May 29.

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