THE SunRice Group generated revenue of $543 million for the FY2020 half-year and Net Profit After Tax (NPAT) of $12.5 million, down 6.8 per cent and 10.2 per cent respectively on the previous corresponding period.
Releasing the half-year financial results today, SunRice chief executive officer, Rob Gordon, said considering the significant challenges the SunRice Group faced on a number of fronts, the result demonstrated the resilience and versatility of the group’s business model.
“In a year of extraordinarily tough drought conditions impacting Australian agricultural businesses, SunRice is proud to have been able to deliver this result, which is in large part due to the Group’s international supply sourcing capability, which has ensured growing global demand is met in key markets,” he said.
“SunRice, through its 2022 Growth Strategy, has been focused on continuing to build our international supply sources and integrated supply chains, and to further diversify our earnings base – an example of which is the Group’s new Lap Vo Mill in Vietnam.
“The Lap Vo Mill, acquired in FY2019, is delivering upon its potential, achieving profitability in its first year of operation, with throughput volumes expected to increase through 2H FY2020 and into FY2021.
“SunRice also continued to integrate acquisitions into its Riviana and CopRice businesses during 1H FY2020, and a key focus remains leveraging the Group’s strong balance sheet to pursue further strategic merger and acquisition opportunities.
“The SunRice Group is committed to delivering on our 2022 Growth Strategy and our strong balance sheet will enable us to continue to invest for growth in parallel with a disciplined return of capital through the buyback.”
The SunRice Group expects full-year FY2020 revenue to be materially in line with FY2019.
However, 2H FY2020 NPAT is expected to be lower than 1H FY2020.
The SunRice Board has confirmed that given this outlook, it currently intends to maintain a fully franked dividend at similar levels to prior years.
SunRice’s Rice Pool business carried over significant volume from the C18 crop which supported a strong milling program through 1H FY2020.
However, the loss in the Rice Pool is expected to increase throughout 2H FY2020 as carryover crop is exhausted and there is greater under recovery of the asset base.
Partially offsetting this impact, CopRice, Riviana Foods and the International Rice segments are expected to contribute more strongly to Group NPAT throughout 2H FY2020 demonstrating the value of SunRice’s diversified earnings strategy.
Financial results in 1H FY2020 were driven by a combination of several factors, including:
- Strong performance from the Singapore Trading Business of the International Rice segment, utilising SunRice’s international supply sources and integrated supply chain;
- Activation of new supply sources across Asia (which will expand to South America in 2H FY2020);
- Better than anticipated returns from the Rice Pool business, due to processing and sales of rice carried over from C18;
- Profitability from CopRice and Riviana Foods, which is expected to increase throughout 2H FY2020;
- Integration of accretive businesses which have been acquired in previous years through strategic merger and acquisitions, a core focus of the SunRice Group’s 2022 Growth Strategy.
SunRice announces share buyback program
The SunRice Board today approved a proposal to conduct a buyback of B Class shares.
The buyback is being undertaken as part of SunRice’s commitment to efficiently manage its capital while maintaining balance sheet flexibility to pursue future growth and investment opportunities.
The SunRice Board believes the current B Class share price does not reflect the value of the SunRice business and its future growth prospects.
The buyback may also provide additional liquidity which could facilitate the increase of B Class share value over time.
The timing and number of B Class shares purchased under the on-market buyback will be contingent on the prevailing B Class share price and market conditions.
The buyback will be funded through a combination of cash and existing, undrawn debt facilities.
It will be within the ‘10/12 limit’ permitted by the Corporations Act 2001 (Cth) and therefore does not require shareholder approval.
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