This year's abundantly watered 5.5 million bale national cotton crop has delivered a 158 per cent jump in half year profit for Namoi Cotton, despite some ginning setbacks from too much wet weather.
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Namoi, which operates gins in nine locations servicing NSW and southern Queensland growers, has declared an after tax profit of $12.4 million - up from $4.8m a year ago.
After three below average cotton growing seasons, the company doubled the number of bales it processed to 950,000 in the post harvest period to August 31 this year.
However, consistent damp weather meant only 80pc of its anticipated 1.2m bale ginning task was completed in the first half of 2022-23, compared with 95pc of the task last year.
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Costs also blew out by 18pc because of supply disruptions from flooding, a slow cotton harvest and reduced access to picked cotton sitting in muddy paddocks.
Labour shortages during harvest and later in the ginning season added to the company's cost inflation pressures.
With the return of a big harvest season, Namoi's 10 gins have mostly worked 24 hours a day to keep up with the task of processing about a fifth of the national crop, employing about 370 staff, including 14 ginners from overseas.
Cottonseed stockpile
The increased quantity of lint ginned also delivered a big lift in the volumes of cottonseed extracted, with a record $30m of inventory now available for sale.
Meanwhile, earnings from the company's 51pc warehousing and logistics partnership with the Louis Dreyfus Company, the Namoi Cotton Alliance, also increased.
Namoi also reaped improved returns from bullish cotton market prices, courtesy of its 15pc stake in the Namoi Cotton Marketing Alliance with Louis Dreyfus.
Overall, Namoi's net revenue for the half year doubled to $74.8m.
Earnings before interest, tax, depreciation and amorisation jumped from $9m in the first half of 2021-22 to almost $21m for the current half-year period, with the company tipping EBITDA to be similar by the end 2022-23.
However, net debt has grown, too, by $26m to $61m.
This largely reflected reduced first half cash flow and the cost of funding the big cottonseed stockpile, most of which was expected to be sold by the end of the financial year.
Good prospects
Chief executive officer, John Stevenson, said despite unusually wet conditions across NSW at present, the outlook for cotton production in the 2023 season and beyond was good with La Nina weather trends ensuring good stored water availability and subsoil moisture reserves.
The company has forecast it will process up to 1.3m bales in 2023-24.
Current regional dam water storage levels in Namoi Cotton's catchment areas were at 10-year highs of 98pc full.
Subject to suitable weather conditions for planting, the next crop was forecast to be above average in the range of 5m to 5.5m bales.
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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).
