Australia's AWB reports US$232 million full year loss

 

 

AWB Limited has reported a net loss of A$250.8 million for the full year to September 30, 2009 on revenue of A$6,686.7 million.

 

This result takes into account the discontinuing businesses AWB Brasil and Hi-Fert, significant goodwill impairment for Landmark Financial Services, a write down in Hi-Fert, and other significant items in relation to restructuring and legal costs associated with legacy issues.

 

However, for continuing businesses - Landmark and Commodities Management - the company reported a profit of A$93 million for the full year to September 30, with a particularly strong performance by AWB Geneva.

 

AWB Managing Director Gordon Davis said that while the 2009 full year result was disappointing, the company is forecasting a full year 2010 profit for its continuing businesses of A$95 million to A$115 million.

 

Davis said Australian Commodity Management had a good result in the first year of deregulation of the wheat export market.

 

''The combined cash and pooling business acquired over 25 percent of the 2008-09 wheat production, benefiting from strong relationships with growers and customers,'' Davis said.

 

''The logistics result improved significantly due to increased volumes through GrainFlow sites, a full year of operations of the rail business and another good performance of the chartering business. The rail business has taken advantage of the shortage of rail capacity in eastern Australia, with 84 newly-constructed grain wagons starting operation. In addition, we recently announced we have commissioned construction of 90 additional grain wagons.

 

''AWB Geneva performed particularly strongly this year with good results in freight, grain and oilseed businesses all improving substantially on the prior year result.

 

Landmark Rural Services (excluding Hi-Fert) performance was materially lower due to reduced prices for most agricultural products, lower margins in the crop chemical and fertiliser sector and dry conditions across the majority of south east Australia which impacted demand, particularly in the first half of the year.

 

''However, Landmark's livestock business had a solid result with improved prices and volumes and the successful commencement of Landmark Global Exports (LGE). During the year LGE exported approximately 20,000 dairy cattle to Asia and over 9,000 beef cattle to Indonesia,'' Davis said.

 

''Landmark Financial Services result was lower due to an increase in the level of credit provisioning. However, the insurance business continues to achieve growth in market share through cross selling into the Landmark network,'' Davis said.

 

Management are well progressed with the wind-down of AWB Brazil and have negotiated a repayment profile for debt with banks, a sale process for key assets has commenced and the operational wind down is well underway.

 

Hi-Fert's 2009 performance was impacted by lower demand for fertiliser due to delayed customer purchasing, reduced margins and an adjustment to the net realisable value of inventory. As previously indicated, AWB and its joint venture partner Elders, are undertaking a sale process for the Hi-Fert business.

 

US$1 = A$1.08172 (Nov 19)