Australian wheat producer and marketer AWB has announced a significant rebound in its after half yearly tax profits on the back of significantly improved wheat crops. AWB said that after-tax profit jumped to AUD $54.1 million (€31.5m) for the half-year ending in March, which compares to after tax profits of AUD $43 million for the 12-month period ending September 2003.
AWB Limited Managing Director, Andrew Lindberg, said the interim profit was a good result for shareholders, and had been supported by improved seasonal conditions in many parts of rural Australia.
Reflecting the better fortunes of the wheat sector after the previous year's poor wheat crops, AWB's earnings per share of 16.3 cents is 50 per cent higher than the prior corresponding half-year.
"A major driver for the improved result across many business streams has been significantly larger wheat volumes," said Lindberg.
"Wheat production from the 2003/04 harvest was a record 25.2 million tons, an increase of 160 per cent from the drought affected 2002/03 harvest of 9.7 million tons.
"Following the record crop, AWB National Pool has made excellent progress in its sales and marketing campaign with significant sales to Egypt, Indonesia, and China, supported by good currency and commodity risk management," said Lindberg.
Lindberg added that finance and risk management, chartering and grain acquisition and trading had made good contributions to the profit results for the first half. Landmark, the company's agriculture focused division, has also made a solid contribution to the result, with merchandise, fertiliser, livestock, real estate, finance, and insurance performing well.
AWB reaffirmed its net profit after tax forecast of AUD $110 million - AUD $120 million, pre-goodwill amortisation and post one off costs, for the full year ending September 2004.The company is currently forecasting domestic wheat production in the range of 21-24 million tons which is based on normal climatic conditions for the season ahead.
"Going forward, management and the Board remain confident that the ongoing focus on our core wheat business while integrating and expanding our Landmark businesses will continue to deliver good returns to AWB's shareholders, the majority of whom are Australian wheat growers," said Lindberg.
In recent years the Asian market has proved increasingly important for Australian wheat suppliers. A growing population, close proximity and a long trading history have made the region an integral part of sales.
As part of AWB's ongoing effort to build its market in Asia, AWB hosted senior management from flour mills in Malaysia, Thailand, Indonesia, Philippines, Vietnam and Indonesia, back in February, providing them with a first hand look at the Australian wheat harvest.
Asian markets are likely to account for as much as 50 per cent of Australia's wheat exports for the coming year. AWB's new and emerging customers are said to now collectively purchase about 4 million tonnes of wheat from various sources around the world.