While saturated and cool conditions in its southern NSW heartland cause headaches for next season's crop, SunRice has made the most of a 50 per cent increase in the size of the 2022 harvest, achieving a 17pc jump in its half year profit.
Improving stockfeed division revenue has complemented a strong rebound in export and domestic rice product sales opportunities, taking net profit after tax to $19.6 million.
Rice growers will also get an early Christmas present from their previous crop, now being milled, with a one-off $25 a tonne pool payment on December 22.
SunRice has significantly lifted its total medium grain benchmark payment expectations from the 2022 harvest to a record (natural season) range of $435/t to $470/t.
Confident its revenue growth will continue into the second half of 2022-23, the company will also pay its B-class shareholders a fully franked interim dividend of 10 cents a share.
Group revenue for the six months to October 31 leapt by a third on the same period last year to $758m, with earnings before interest, tax depreciation and amortisation up 16pc to $42.6m
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"We expect the revenue growth achieved in the first half to continue, supporting strong paddy rice returns in the rice pool business and profitability in the profit businesses, despite near-term underlying operational and inflationary pressures," said managing director, Rob Gordon.
Drought conditions in the US and other countries had helped prospects, opening up fresh export growth areas into rice markets unable to be fully serviced by the North American and European export sector, and other rivals.
SunRice's diverse business spans rice processing and consumer product manufacturing in Australia and overseas; exports to 50 countries; the Riviana Foods consumer and catering industry product lines; the CopRice stockfeed and pet food portfolio, and more.
Crop recovery
A range of factors drove the company's latest financial results, most notably the greater availability of grain in the NSW Murrumbidgee and Murray valleys which produced an autumn rice harvest of 688,000 paddy tonnes as a recovery from drought years continued.
Its rice pool business was able to respond with strong sales volumes in domestic and overseas premium markets, including the Middle East, and new markets which have been affected by droughts.
Mr Gordon said despite rising labour costs, volatility in foreign exchange rates and worsening inflationary pressures on key business inputs, such as freight, the group's improved revenue and profitability reflected its strong brand and market positioning.
Sales price rises were achieved across most segments and product categories to counteract higher cost pressures.
Meanwhile, although farmers had endured a rain- and flood-disrupted spring planting season for the new crop, and cooler than average growing temperatures were tormenting the main production regions, SunRice predicted "ample" Riverina rice supply in 2023.
Good outlook to 2024
"The irrigation water supply outlook is pointing towards positive growing conditions into the 2024 growing season," Mr Gordon said.
"The group is well positioned to take advantage of these favourable conditions and current global market dynamics to help deliver positive returns to growers and shareholders."
Reflecting that confidence, SunRice's previous 2022 crop pool price expectations of $410/t to $435/t had lifted by between $15 and $35 for the medium grain Reiziq variety to payment forecast highs from the pool.
While cost rises would continue to gnaw at profits, the company was optimistic about some relief from freight and distribution costs later in the trading year and into 2024.
Increased rice supplies had assisted the ongoing recovery of key Pacific markets where SunRice has made some strategic moves to boost volumes in what continued to be "a challenging" economic environment.
CopRice expands
Despite abundant pasture conditions and feed grain reserves on Australian farms, the continued recovery of the CopRice stockfeed business had seen it grow market share and volumes.
The beneficial impact of January's acquisition of Pryde's EasiFeed contributed an extra $17.7m in revenue and supported CopRice's diversification into new geographies.
In particular, CopRice grew its presence in the high value branded equine market.
Unless there was an unforeseen slide in sales volumes, the group's overall revenue growth and profits were expected to be further helped by sales price increases implemented during the first half,
SunRice also expected to be able to extend its participation in global bulk rice tenders during the second half.
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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).
