SunRice posts $22.7 million profit in tough drought year

Grain Central June 25, 2020

THE SunRice Group has posted a net profit after tax (NPAT) of $22.7 million, down five per cent year-on-year, and a consolidated revenue of $1.13 billion, down 5pc, for the year ended 30 April 2020 (FY2020).

SunRice chief executive officer, Rob Gordon, said it was a strong result in what was “an extraordinary year”.

“Not only did we have the second-smallest Australian rice crop on record, we also faced deteriorating economic conditions in some of our international markets, the impact of successive natural disasters and, in the final two months of FY2020, COVID-19,” he said.

“The fact we have been able to maintain profitability against such challenging headwinds and declare a fully franked dividend in line with guidance highlights the ongoing strength of our business model and balance sheet.”

The Financial Results were driven by a combination of several factors that included:

  • Ongoing drought conditions in the Riverina, leading to the then second-smallest crop on record of 54,000 tonnes in CY19, down 91pc on the CY18 crop of 623,000 tonnes
  • Deteriorating conditions in key global markets, particularly across the Pacific
  • Flexing of our international sourcing capability to offset the lower Australian crop and ensure the Group met continued growing global demand for SunRice’s products
  • Continued execution of the 2022 Growth Strategy, delivering significant value during FY2020 with new global supply chains, innovative product offerings across multiple segments and expanded production capabilities
  • Response to COVID-19 in the last two months of FY2020 has demonstrated the resilience and agility that exists across our portfolio of businesses, and highlighted the strength of the Group’s existing risk management and mitigating strategies
  • Despite restructure of SunRice’s Riverina operations in line with lower production levels in FY2020, the Rice Pool was unable to absorb all overheads and recorded a loss, impacting overall Group profitability.

Coordinated effort

Mr Gordon said SunRice responded to the events of FY2020 with a significant coordinated effort.

“Our international sourcing capability was rapidly flexed in response to the small Australian rice crop – with strategic expansion of our supply chains enabling us to backfill key markets and maintain continuity of supply,” he said.

Rob Gordon

“To successfully meet global demand for our products of in excess of 1 million paddy tonnes of rice with only 5 per cent of this volume available from the CY19 Riverina harvest is a clear demonstration of our strategy in action.

“Unfortunately, the continued drought, low water availability and high water prices in the Riverina led to the CY20 crop, harvested at the end of FY2020 and beginning of FY2021, being the new second-smallest on record, at 45,000 paddy tonnes.

“Other highlights of the execution of our 2022 Growth Strategy in FY2020 included the Lap Vo Mill in Vietnam achieving profitability in its first full year of operation, and the further diversification of our supply sources to include South America.

“We continue to invest in the Riverina, with new facilities completed or initiated in FY2020, including a new stabilised bran plant in Leeton, repurposing of the Coleambally Mill into a CopRice ruminant plant, and upgrades to our Leeton Rice Food facilities.

“The Group absorbed restructuring costs related to the reconfiguration of our Riverina operations, and one-off costs related to COVID-19, both of which weighed against overall profitability.

“The Group was also focused throughout FY2020 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 FY2021.

“We are well placed to build on the solid results in FY2020 to ensure the continued strategic growth of the Group and delivery of increased value to both A and B Class Shareholders.”

Source: Sunrice



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