SunRice’s HY24 results show gains off the back of strong volumes. Photo: Deniliquin Freighters

AUSTRALIA’S rice marketer SunRice Group has posted revenue of $919 million for the half year ending October 31.

This is an increase of 21 percent on the previous corresponding period.

SunRice recorded HY24 net profit after tax of $30.6M, up 56pc, and earnings before interest, taxes, depreciation, and amortisation of $63.3M, a jump of 48pc on HY23.

SunRice Group CEO Paul Serra said these results were driven by several factors, including company initiatives and international economic conditions.

These include international market expansion, the award of overseas government tenders, a weakening Australian dollar which supported revenue from local rice exports, cost-saving initiatives, sales-price increases, and the strong performance of the Australian Rice Pool Business.

“The SunRice Group has delivered another strong financial performance in [HY24], with improvements in both revenue and profitability, as a result of our continued focus on our growth strategy,” Mr Serra said in a statement to the ASX.

“Ultimately, these figures reflect our team’s hard work, dedication and the successful implementation of a number of growth initiatives.

“The revenue and profitability growth achieved in [HY24] is expected to continue into the second half of the year, despite the impact of inflationary pressures continuing in the near term.”

SunRice’s HY24 results were heavily influenced by earnings from the International Rice and CopRice segments.

The International Rice business, which features operations of the global trading arm of SunRice and other international entities, recorded EBITDA growth of 105pc for HY24.

This result was driven by increased volumes, inflation-focused pricing strategies and good growth in the Middle East and US markets.

The stockfeed segment, CopRice, posted an increase in EBITDA of 95pc, attributed to a growth in volume and market share as well as a drop in freight costs.

SunRice generated $1.3M in profits from the sale of a number of properties in HY24.

The Group was also assessing an upgrade of its Leeton manufacturing operations to bolster capacity and productivity, and exploring a pipeline of potential strategic opportunities, particularly acquisitions.

Potential headwinds

In its release to the ASX, SunRice warned that the delivery of the 2H24 result will depend on the Group’s ability to navigate a number of headwinds.

The most significant of these include: high interest rates and inflation impacting consumer spending; a weak Australian dollar and a rapidly devaluating PNG kina, and the recovery from drought conditions in the Northern Hemisphere.

The recent conflict in the Middle East is also creating uncertainty in a region in which the group has some of its largest markets.

At this stage, the group has not been directly impacted by conditions in these markets.

Abundant CY24

The lower end of the Paddy Price range for crop year 2023 was increased in November, with an updated range of $410-$450 per tonne.

The SunRice Group expects a fourth consecutive year of abundant Australian rice production, with the CY24 crop currently anticipated to be larger than the CY23 crop.

The expected drier conditions in Australia and ongoing water reform initiatives in the Murray Darling Basin have the propensity to affect the volume of Australian rice produced beyond CY25.

However, the group is expecting a sufficient volume of the CY23 crop to be carried over at the end of the financial year, complemented by a strong CY24 crop.

The positive benefits of carryover volumes will be managed with a mid-term lens and the group expects to have ample volumes of Australian rice to sell into premium markets over this time.

The signing of a new Sole and Exclusive Export Licence Agreement for a further period of five years allows the group to continue to service markets outside of Australia.

The Australia-United Kingdom Free Trade Agreement, which came into effect in May, provides future certainty and opportunities for the rice pool.

Source: SunRice Group