THE year to April 30 has delivered SunRice Group a record revenue of $1.64 billion, up 23 percent on the FY22 result, according to the company’s full-year results released yesterday.
The ASX-listed company delivered a net profit after tax of $54.8 million for FY23, up 12pc on the FY22 result, and earnings before interest, taxation, depreciation and amortisation of $117M, up 28pc from last year.
The calendar year 2022 paddy price of $461 per tonne for medium grain Reiziq was also a record.
“FY2023 was an outstanding year for the SunRice Group, in which we delivered the highest group revenue, naturally determined paddy price and total fully franked dividend in the company’s 73-year history, despite a challenging inflationary environment,” group chief executive officer Rob Gordon said.
The CY22 Riverina rice crop of 688,000 tonnes was 65pc larger than the CY21 one, and this supported strong sales volumes in key premium markets, and expansion in new and existing territories impacted by drought.
It also improved the profitability of the group’s segments that rely on inputs from the Australian Rice Pool Business.
Mr Gordon said SunRice Group made further progress against its sustainability strategy and its six focus areas, including launching the Australia Vietnam Mekong Delta Sustainable Rice Value Chain Project, and becoming a founding member of the National Plastics Recycling Scheme in Australia.
“The Group is well positioned to continue its momentum in FY2024.
“We remain focused on maintaining a strong balance sheet, continuing to explore a well-developed pipeline of potential strategic opportunities, and reinforcing our established branded position.”
The company’s outlook remains positive, based on expectations for continued growth in revenue and profit in FY24, and an ongoing abundant supply of Riverina rice into FY25.
In FY23, sales price increases occurred across most of the group’s segments and product categories, which helped to offset inflationary pressures.
Revenue growth was also supported by favourable changes in product mix in some markets.
The group’s CopRice segment returned to profitability in FY23, driven by the positive impact of turnaround actions implemented.
These came about in the Australian ruminant business and companion animal portfolio, and saw the first full-year contribution of Pryde’s EasiFeed, which was acquired in January 2022.
On the downside, the escalation in freight and distribution costs due to ongoing disruption to domestic and international supply chains had an impact, as did widespread inflationary pressures, which drove a material increase in key input costs including raw materials, labour and financing.
The Group however continues to navigate an environment where input costs such as raw materials, labour and interest costs are expected to remain high.
Combined with geopolitical uncertainties, volatility in foreign exchange rates and the impact of the current high inflationary environment on consumer spending trends, these factors may impact the expected earnings growth in FY2024.
Trukai buy-out under way
Ample Australian rice production, with the recently harvested CY23 crop of approximately 500,000 paddy tonnes, will underpin supply into key premium domestic and international markets while supporting profitability in a number of the group’s segments benefiting from the Riverina crop.
While opportunities still exist in the short term for SunRice’s Australian rice and international supply chains, these are expected to be countered to a degree by the drought in the US breaking earlier than originally expected.
Given the likely resulting increase in competition in key markets in FY24 and a reduction in global rice prices in both consumer and tender markets, the paddy price range of $390-$450/t announced in February 2023 for the CY23 crop remains in place at this stage.
The outlook for CY24 crop plantings, which will be processed and marketed in FY25, also remains positive, with southern New South Wales water storages currently over 90pc full.
This is expected to result in a fourth consecutive year of abundant Australian rice production in FY25, with the Riverina storage and milling-asset footprint expected to fully recover its operating costs.
SunRice announced this week it has entered into a share buy-back agreement under which it will become the sole shareholder in Papua New Guinea’s major rice supplier, Trukai Industries Ltd.
Trukai was founded in 1970, and SunRice currently holds 66pc of Trukai shares, with the balance to be bought from the only other shareholder, Melanesian Trustee Services.
Source: SunRice Group