Takeover target, Namoi Cotton, lifted its net profit 72 per cent, halved its debt and shipped 30pc more cotton to overseas buyers last year.
It also ended its 2023-24 trading year confirming a total dividend of 1.5 cents a share - its first to shareholders since 2018.
The turnaround happened despite the company ginning slightly fewer bales and trading less cottonseed last season.
Australia's biggest cotton ginner - and the focus of two takeover bids by foreign rivals - handled more than 27pc of the national crop in 2023-24, but its throughput was about 9000 bales less than the previous trading year's 1.17 million.
Namoi managed to take full advantage of much better harvest conditions during 2023 to significantly improve processing efficiencies, breaking ginning records at its Wee Waa and Goondiwindi sites and lifting productivity 10pc at Trangie and Merah North.
It is also looking ahead to "above average" ginning volumes this year, with the first cotton modules now being processed and more than 75pc of its expected harvest volume, of up to 1.1m bales, now contracted.
Last year the company also benefited from record warehousing volumes, improved its cottonseed trading strategies and handled significant pulse grain volumes at its Wee Waa rail packing site.
All up, Namoi Cotton defied an $11.5m fall in revenue to $247m by achieving a $6.9m net profit after tax for 2023-24 - up $2.9m on the prior trading year.
As the pioneering cotton business released its annual results for the 12 months to February 29, the Australian Competition and Consumer Commission was calling for submissions to assist its investigation into a second proposed takeover bid for Namoi.
Last month, Singapore-based Olam Agri Holdings, which already owns the rival Queensland Cotton ginning and marketing business, revealed a non-binding, indicative offer worth 59 cents a share.
If it proceeds, Olam's bid will trump an earlier bid by the French-owned Louis Dreyfus Company, which is also being examined by the ACCC.
The ACCC closed public submissions relating to the LDC proposal in early March, but continues to study the implications of the French offer of 51c a share for the 83pc of Namoi which Louis Dreyfus does not already hold.
The competition watchdog could potentially make a decision by mid-May.
Namoi's annual report noted, however, there was, so far, insufficient evidence to conclude that LDC's proposed acquisition of the group may go ahead, given it still needed various regulatory approvals and final approval from shareholders.
On the other hand, Louis Dreyfus has stirred speculation about its possible counter offer plans after recently beefing up its financial services advisory team to support the bid.
LDC, which owns three gin sites of its own in Queensland and NSW, is also Namoi's joint venture lint and grain commodities marketing partner.
Namoi's joint venture supply chain and marketing operations generated $6.6m in earnings before interest, tax, depreciation and amortisation last year, an increase of $2.1m on 2022-23 (total EBITDA was $23m).
The improved result was attributed to a return to normal supply chain conditions, including higher volumes of cotton lint received and stored and grain packed.
The supply chain and marketing joint venture ended the 2023-24 year shipping more than $1m bales - up 30pc.
Our gearing and term debt levels are the lowest they have been in the 10 years
- Tim Watson, Namoi Cotton
Executive chairman, Tim Watson, told shareholders the past two years of above average seasons had allowed Namoi to strengthen its balance sheet to tolerate future seasonal variability.
"Our gearing and term debt levels are the lowest they have been in the 10 years," he said.
Namoi's net debt was pruned back from $47.2m to $23.7m, while gearing declined from 26pc to 14pc.
"Ginning operations were positively impacted by better quality cotton and lower moisture levels, both leading to more efficient ginning," Mr Watson said.
"This, together with an earlier start to ginning, led to a significant improvement in our ginning performance, demonstrated by the ginning progress reported at the half year."
He said last season's ginning had been 86pc completed in August, compared to 81pc in late August 2022.
Industry forecasts were tipping an above average national 2024 season cotton crop of 4.5m to 4.9m bales.
Mr Watson said rain across most of Australia, and the above average dam water storage levels that supported above average cotton production in the 2023 season had continued for the 2024 season and "could potentially support average to above average cotton planting for the 2025 season".
Current dam water storage levels in Namoi's mostly NSW catchment areas, were around 66pc.
Meanwhile, in northern Australia Namoi invested a further $2m towards it Kimberley Cotton Company joint venture to support construction of the gin at Kununurra in Western Australia.
The KCC gin, to which Namoi is contributing project management resources and ancillary equipment, began construction last August and is on track to be commissioned by mid-2025.
Later this year Namoi Cotton ginning staff will install the KCC's ginning equipment.
To ensure it has enough qualified staff to deal with the current harvest season and future requirements in the Ord Irrigation Area, Namoi has "imported" 13 international staff to help operate its gins.
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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).
