SunRice’s profit result for 2017-18 has jumped 32 per cent to $45.1 million on the back of a big yielding 800,000 tonne harvest last year, rebounding global prices and better market conditions in New Guinea.
A drying season for many livestock producers has also revved up demand for CopRice stockfeed products, especially among sheepmeat producers using supplementary rations to help make the most of red meat demand.
Stockfeed sales also reflected improved confidence in dairy markets.
The farmer-owned national rice marketer’s broad ranging SunRice group, which includes divisions in North Queensland, the US, Vietnam and Middle East, has reported a 6pc recovery in revenue to $1.2 billion.
The result is an upbeat prelude to SunRice shareholders’ meeting in September to vote on the company’s latest plans for a dual shareholder class listing on the Australian Securities Exchange.
The 2017 Riverina rice crop, the largest in three years, drove a 57pc rise in the company’s rice pool revenue to $440m, helped by a doubling in global prices in the past 12 months.
Paddy payments to growers from the pool subsequently jumped from the original $300 a tonne promised for mainstream variety Reziq back when the pool opened, to $378.66/t when it closed at the end of 2017-18.
With sales opportunities in lower paying markets providing increased support from overseas supply points, particularly Vietnam, the Riverina-grown crop has been able to target the highest returning export markets.
The best of SunRice’s Japonica style varieties are even selling in beef bowl restaurants in heavily tariff-protected Japan, where they are actually promoted as being sourced from Australia.
Japanese food wholesalers are also buying the Australian crop, and from SunRice’s US subsidiary, SunFoods, to fill a growing global market for sushi rice.
For lower paying markets SunRice now draws almost 600,000t of paddy rice a year from Vietnam.
“SunRice’s international sourcing capabilities continued to allow the business to meet expanding demand for our products,” said managing director, Rob Gordon.
“We have established strategic partnerships with Japanese wholesalers to deliver value-added opportunities in the market.
“We introduced our unique Low GI (glycemic index) rice to new markets to help address diabetes and obesity.
“We are also well advanced in securing a vertically-integrated supply chain in Vietnam.
“This is an exciting time for SunRice and the Australian industry.”
He said SunRice had performed strongly through the commodity cycle with an immediate return to profit growth after the tight 244,000 harvest in 2016.
“Having demonstrated in 2016-17 that the business has the strength, resilience and flexibility to weather cyclical commodity downturns, 2017-18 was characterised by rebounding profitability and reinvigorated growth across the group,” Mr Gordon said.
On the domestic market, the Riviana ingredient foods division grew its pre-tax net profit by 6pc to $9m despite a 5pc dip in revenue to $120m, but the company’s rice food business sales volumes and revenues have remained relatively flat compared to last year, with revenue declining 5pc to $107 million and pre-tax net profit down 72pc to $2 million.
Mr Gordon blamed the profit downturn on increased competition from Vietnamese flour imports and imported privat label products and costs associated with the launch of adult mini cakes.
However, the market was also shifting towards more convenience products where SunRice remained Australia’s leading brand by sales value in the microwave rice category with market share growing to 50pc.
Microwave product sales now generated almost half of this segment’s sales revenue.
“We’ve been holding strong ground here for a long time and have great plans for more innovation in this space in the year ahead,” he said.
“SunRice is uniquely positioned for continued growth, driven by our refreshed five-year strategy, which builds on our resilience and operational strengths and focuses on how we can capitalise on global consumer food trends.”
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
