The Chairman of AWB Limited, Brendan Stewart, today announced an after-tax full year profit of $96.9 million (post goodwill and amortisation) for the year ended 30 September 2004 ($134.7 million on a pre goodwill and amortisation basis).
“The Board has declared a fully franked final 2003-04 dividend of 11 cents per share, to be distributed to eligible shareholders on 17 December 2004 for shareholders registered as at 3 December 2004,” said Mr Stewart.
“When added to the interim dividend of 14 cents per share the total dividend paid to shareholders for the year is 25 cents. The Board intends to maintain a stable dividend payment policy subject to future financial performance and capital requirements,” said Mr Stewart.
AWB Limited Managing Director, Andrew Lindberg, said the profit was a strong result for shareholders, and had been supported by improved seasonal conditions in many parts of rural Australia last year and the inclusion of a full year of Landmark’s earnings.
AWB’s earnings per share (post goodwill and amortisation) was 28.8 cents, which is 81% higher than last year’s drought impacted result of 15.9 cents (40.1 cents, on a pre goodwill and amortisation basis, 139% higher than last year).
“The major drivers for the improved result across many business streams have been the significantly larger wheat volumes from the 2003/04 harvest and the inclusion of the full year’s earnings from Landmark,” said Mr Lindberg.
“Wheat production from the 2003/04 harvest was a record 25.2 million tonnes, a substantial increase from the drought affected 2002/03 harvest of 9.7 million tonnes.
“Following the record crop, AWB National Pool has made excellent progress in its sales and marketing campaign with significant sales to China, Egypt, Indonesia, Iraq, Japan and South Korea supported by good currency and commodity risk management,” said Mr Lindberg.
Mr Lindberg said Landmark and Financial Services made solid contributions to the profit result.
“Landmark’s merchandise, fertiliser, livestock, real estate, finance, and insurance divisions have performed well, however, revenue from wool operations was down due to lower wool prices,” said Mr Lindberg.
The other strong performing business was Grain Acquisition & Trading, and a key to this result was the execution of a very successful chartering strategy in a favourable freight environment.
Mr Lindberg said the integration of Landmark was progressing well, and that the company had exceeded its first year synergy targets which it set when AWB acquired the business last year.
“AWB’s financial objectives are clear – solid financial growth, stable dividend payments, efficient capital management and improved quality of earnings,” said Mr Lindberg.
“The Board and Management remain confident that the ongoing focus on our core wheat business and the integration and expansion of Landmark businesses, will continue to deliver good returns to AWB’s shareholders, the majority of whom are Australian wheat growers.
“AWB is committed to continuing the progress made with the integration of Landmark, unlocking value within the two organisations and achieving earnings targets. The drought is expected to continue to have some lagging impact in terms of livestock and wool volumes, however the market for merchandise and fertiliser is promising and livestock prices look set to remain strong,” said Mr Lindberg.
In light of recent seasonal conditions, AWB has adjusted its forecast of domestic wheat production to a range of 20–22 million tonnes. AWB’s previous forecast in May 2004 was a range of 21-24 million tonnes.
Based on current seasonal and market conditions, AWB’s 2004-05 earnings forecast is expected to be comparable to the 2003-04 earnings. AWB will focus on achieving its Return on Equity target of 15% (pre goodwill and amortisation) in the medium term.
- Net profit after tax of $96.9 million, up 120% (post goodwill, and amortisation).
- Managed the largest ever national wheat crop of 25.2 million tonnes – up from 9.7 million tonnes in 2002/03.
- Delivered out-performance growth (net of hurdle) of $99 million for the 2002/03 Pool and $183.6 million to date for the 2003/04 Pool.
- Exceeded first year Landmark EBIT targets, with revenue, cost savings and finance growth of $13 million.
- Increased the volume of grain traded by Domestic Trading by 25% to over four million tonnes.
- Expanded Global Trading business, with two million tonnes of grain traded by AWB Geneva.
- Significant contribution from the Grain Acquisition and Trading division with 10 million tonnes managed through Chartering. Of this, 8 million tonnes representing 45% of Pool volumes were sold on a cost and freight (CNF) basis
- Record receivals of 1.8 million tonnes for AWB GrainFlow – up from 185,000 in 2002/03, and improved volume of grain through Melbourne Port Terminal of 1.3 million tonnes, up from 470,000 tonnes in 2002-03.
- Landmark’s loan book reached a record high of $1.1 billion.
- AWB Harvest Loan book peaked at $1.6 billion, maintaining the leadership position in the harvest finance market.
- Record real estate sales worth approximately $1 billion.
- Increased merchandise and fertiliser sales by 10%.
- Traded more than two million cattle and 10 million sheep during 2003/04.
For further detail on AWB Limited’s profit results visit the Investor Relations section and look under financial results.