AWB Limited today announced a higher than expected profit of $83.7 million after tax for the 12 months to 30th September 2001.
AWB Limited’s Chairman, Mr Trevor Flugge, said the strong profit result represents a 32% increase on the 2000 reported after tax profit of $63.3 million, and exceeds AWB Limited’s prospectus forecast of $79.4 million.
Earnings per share increased by 30% to 34.1 cents per share with return on average shareholders’ equity increasing to 12.8%.
“The Board has declared a fully franked final dividend of eight cents per share, payable on 4 January 2002,” said Mr Flugge.
“When added to the interim dividend of 14 cents per share the total dividend paid to shareholders for the year is 22 cents per share, representing a payout ratio of 67% of net profit after tax,” said Mr Flugge.
AWB Limited’s Managing Director and Chief Executive, Mr Andrew Lindberg said the 2001 financial year marked AWB Limited’s successful transformation into a listed public company.
Over the past year AWB Limited has successfully listed on the Australian Stock Exchange, committed to building six new grain handling sites in NSW and Victoria to reduce the supply chain costs for growers and negotiated a joint rail freight agreement with FreightCorp. This was designed to deliver increased investment in NSW rail and grain handling infrastructure and significant long-term savings to grain growers.
“In a year of significant achievements, we have posted a strong performance in both profitability and returns to Australian grain growers while creating the platform for growth,” said Mr Lindberg.
“We have created a strong company which is well positioned to continue to deliver on our commitments to growers, customers and shareholders.
“In the area of domestic trading we achieved a record result of earnings before interest and tax of $68.6 million through favorable trading conditions, higher tonnages and grain values,” said Mr Lindberg.
The key factors in this favourable outcome were the recruitment of selected skilled staff to enhance risk management, an improved understanding of global factors influencing grain prices and new strategies to best capture the prevailing opportunities.
Another key profit driver was AWB Limited’s finance and risk management products offered to growers, which recorded a profit before tax of $84.8 million. This result was achieved in the face of increased competition, decreased underwriting revenue arising from lower pricing and a smaller crop than previous years. Lower interest rates achieved on invested capital also affected the result.
“Despite increased competition in post harvest lending, we retained strong market share due to competitive pricing, strength in distribution and product positioning,” said Mr Lindberg.
“I am confident that our strategic direction and the management team we have in place means we are well prepared for the challenges and opportunities that lie ahead,” said Mr Lindberg.
One of the key tasks for AWB Limited is the provision of services to AWB (International) Limited (AWBI) in order to manage the National Pool.
“We have implemented a new performance-based fee model, which will reward or penalise AWB Limited on a commercial basis,” said Mr Lindberg.
“The new model aligns both the mandate of AWBI to maximise net National Pool returns with the mandate of AWB Limited, by creating incentive for investment and improvement in performance.
“It is designed to provide the appropriate incentives to AWB Limited to deliver the most effective and efficient services and to achieve superior pool return out-performance while sharing the risks and costs associated with the National Pool,” said Mr Lindberg.
“AWB Limited continues to maximise financial returns to growers through the operation of the Single Desk,” said Mr Lindberg.
“For the fourth consecutive year, AWBI exports of Australian wheat reached 15 million tonnes, with more than 40 countries and 70 individual customers choosing to buy grain from AWBI,” said Mr Lindberg.
Below is a summary of AWB Limited’s profit result under Business Unit Performance compared to the corresponding period in 2000.