SunRice profits shrink 31pc to $23m after big dry withers local crops

SunRice pulls $23m profit despite drought, supply hurdles and coronavirus

News
Aa

Despite having hardly any locally-grown rice to sell, SunRice posts a $22.7m full-year profit

Aa

Despite having hardly any locally-grown rice to sell, SunRice has contained its sliding full-year profit to $22.7 million - down 31 per cent on 2018-19.

Deteriorating results in its key Pacific marketplace added to the stresses of drought and last year's third-smallest crop on record (54,000 tonnes) to test the national marketer and processor.

However, sales revenue dipped just 5pc to $1.13 billion as overall global demand held strong and was able to be serviced by grain sourced from the company's overseas divisions, and new South American suppliers.

Last season's Australian crop, down 91pc from the 623,000t autumn harvest in 2018, was followed by an even smaller 45,000t crop just harvested because of limited irrigation water available during summer.

In what was an extraordinary year, these are strong results - Rob Gordon, SunRice

SunRice officials have warned, based on recent trends, supplies of Australian-grown rice for domestic markets may actually run out by year's end.

"The fact we have been able to maintain profitability against such challenging headwinds and declare another fully franked dividend of 33 cents a share, in line with guidance, highlights the ongoing strength of our business model and balance sheet," said managing director, Rob Gordon.

"In what was an extraordinary year, these are strong results.

"To successfully meet global demand in excess of 1 million paddy tonnes with only 5pc of this volume available from the 2019 Riverina harvest is a clear demonstration of our strategy in action."

RELATED READING

Aside from the small Australian crop and difficult trading results in some international markets, SunRice also weathered various COVID-19 challenges in the final two months of its 2020 trading year.

Mr Gordon said the company's response to COVID-19, including an unprecedented 250pc jump in domestic consumption demand in April, demonstrated its resilience and agility and highlighted the strength of the group's risk management and mitigating strategies.

However, despite restructuring and scaling back SunRice's Riverina milling and packing operations to cope with much-reduced crop volumes, its rice pool business was unable to absorb all its overheads and subsequently recorded a loss which eroded overall group profitability.

Strategic expansion of our supply chains enabled us to backfill key markets and maintain continuity of supply - Rob Gordon

He said while the reconfiguration of Riverina operations and one-off costs relating to COVID-19 weighed against profitability, the group was still well placed to build on its solid 2019-20 results.

It could deliver increased value to its Australian Security Exchange listed B-Class shareholders, and the growers who hold critical A-class share ownership control of the former co-operative business.

"Our international sourcing capability has rapidly flexed in response to the small Australian rice crop," Mr Gordon said.

Rob Gordon

Rob Gordon

"Strategic expansion of our supply chains enabled us to backfill key markets and maintain continuity of supply."

Other highlights included the new Lap Vo Mill in Vietnam achieving profitability in its first full year of operation, and new supply sources for grain being secured to compensate for the Australian crop shortfall.

"We continue to invest in the Riverina, with new facilities completed or initiated in FY2020, including a new stabilised bran plant in Leeton, repurposing the Coleambally mill into a CopRice ruminant stockfeed plant, and upgrades to our Leeton rice food facilities," he said.

"The group is also focused on continuing to leverage our strong balance sheet to pursue value-accretive merger and acquisition opportunities, particularly in our CopRice and Riviana segments, which will continue into 2020-21."

  • Start the day with all the big news in agriculture! Click here to sign up to receive our daily Farmonline.
Aa

From the front page

Sponsored by