The Chairman of AWB Limited, Mr Brendan Stewart, today announced an after-tax profit of $91.3 million for the half-year ended 31 March 2005. This result includes the profit on the sale of AWB’s investment in Futuris Corporation Limited (FCL), which realised a profit after-tax of $41.8 million. Excluding goodwill and amortisation and the profit on the sale of the FCL investment, the underlying profit after tax was $66.6 million.
“The Board has declared a fully franked interim dividend of 16 cents per share, up 2 cents on the previous corresponding period (pcp) to be distributed to eligible shareholders on 7th July 2004, for shareholders registered as at 17th June 2005,” said Mr Stewart.
The dividend reinvestment plan will continue to be offered to shareholders. There will be no discount applied and the shares will be acquired on market or via new issue, if required. The pricing period will be 21st June through to 4th July 2005. Furthermore, the Board expects to pay a final dividend of at least 11 cents per share, given a return to normal seasonal conditions on the east coast.
AWB Limited Managing Director, Mr Andrew Lindberg, said the interim profit was a strong result in difficult circumstances and demonstrated AWB’s diversification strategy was working.
“Despite a 17% fall in wheat volume over the 2003/04 harvest AWB has achieved an underlying after-tax profit result of $66.6 million, a 3% decrease on the pcp of $69 million,” said Mr Lindberg.
This slight decrease in underlying earnings is mainly due to the return to more sustainable earning levels from the chartering division, as well as poor seasonal conditions in some parts of Australia during the 2004/05 harvest. Wheat production from the 2004/05 harvest was just under 21 million tonnes, a decrease of 17% from the record 2003/04 harvest of 25.2 million tonnes.
AWB’s reported earnings per share of 26.6 cents is 63% higher than the prior corresponding half-year.
Mr Lindberg said strong contribution to profit result came from Landmark, Finance and Risk Management, and Pool Management Services.
“The National Pool continues to perform well despite a difficult environment, and AWB continues to execute a carefully managed sales program to a growing market share in Asia, customers in North Africa and strong sales to long standing markets in the Middle East,” said Mr Lindberg.
“Within the Landmark business, our merchandise, fertiliser, livestock, real estate, finance, and insurance divisions all performed well. However, revenue from wool operations was down due to low wool prices and a slight reduction in wool volumes.
“AWB remains focused on continually improving and broadening its finance product range to customers, and maintaining its market share in what is a very competitive environment. We launched new risk management products for this season’s wheat harvest and Landmark is currently developing new funding arrangements that will allow us to develop more competitive and flexible products that meet our rural customer needs and strategy.
“In December 2004, AWB formed a joint venture company, ELF Australia Pty Ltd, with Elders, which acquired a 66.66 per cent share of WMC Resources Limited wholly owned subsidiary company, Hi-Fert Pty Ltd.
“ELF Australia negotiates the purchase of fertiliser for the Landmark and Elders rural retail distribution outlets in the eastern and southern states of Australia from Hi-Fert and other suppliers. This initiative combined with our ownership in Hi-Fert has enhanced our capability and will deliver substantial benefits to AWB,” said Mr Lindberg.
The integration of Landmark is progressing well and is on track to deliver year two synergy targets. Back office integration is complete and the focus has now shifted to the implementation of the Integrated Business Model.
“AWB is focused on its objects and remains committed to delivering good returns to AWB’s shareholders, the majority whom are growers,” said Mr Lindberg.
2004/05 Half Year Highlights
- Wheat production for 2004/05 down by 17% (20.9 million tonnes) compared to 25.2 million tonnes for 2003/04. However, underlying earnings (excluding goodwill and amortisation and profits on sale of AWB’s investment in FCL shares), down 3.4% to pcp;
- Reported net profit after tax of $91.3 million, up 69%;
- Profit on sale of AWB’s investment in FCL of $55.2 million ($41.8 million after tax);
- Reported earnings per share of 26.6 cents, 63% higher than last year (16.3 cents); underlying earnings per share (excluding goodwill and amortisation and profits on sale of AWB’s investment in FCL shares) of 19.4 cents, 7% lower than pcp;
- On track to achieve year two Landmark integration target ($20-$25 million EBIT uplift);
- Interim dividend of 16 cents per share, up 2 cents on pcp;
- Maintained leadership position in the harvest finance market with AWB harvest loan book peaking at $1.1 billion;
- Continued growth in Landmark lending book exceeding $1.2 billion;
- Increased merchandise and fertiliser sales by 6% nationally;
- Establishment of strategic partnership in fertiliser with Elders and WMC Resources, including the acquisition of 33% of Hi-Fert; and
- Expansion of international trading with an office opened in New Delhi, India.
If normal seasonal and market conditions prevail over the next six months, AWB’s 2004/05 earnings forecast is expected to be comparable to the 2003/04 earnings, which was $96.9 million (post goodwill and amortisation).
AWB has revised its forecast for domestic wheat production for 2005/06 to the range of 21-23 million tonnes which is based on normal seasonal conditions. Conditions in WA are excellent, eastern states remain largely dry which is delaying planting.
AWB’s Australian footprint includes more than 430 outlets across Australia, and it is a full service provider for the business needs of Australian farmers. With a spread of more than 2,700 staff reaching about 100,000 farmers, the AWB Group provides a comprehensive range of finance, insurance and commodity risk management services across all agricultural regions of Australia, and all major rural industries. The company is also one of nation’s largest handlers of wool, suppliers of rural merchandise, distributors of fertiliser, marketers of livestock and brokers of rural real estate.
For further detail on AWB Limited’s profit results visit the Investor Relations section and look under financial results.