Australia: ABB forecasts a 2007 FY net profit of AU$30 million; plans to buy NZ Grain & Seed

Integrated Australian agribusiness ABB Grain Ltd forecasts a net profit after tax of between AU$30m and AU$35m for its current financial year, according to its press release, February 29.

ABB Grain managing director Michael Iwaniw told shareholders at today’s annual general meeting in Adelaide that ABB was poised to make strategic investments interstate and in New Zealand, after weathering Australia’s worst drought in 25 years.

“We expect profit to be backed by a strong performance from our malt division, improved contribution from national supply chain and marketing, and a full year of profitability from rural services.

“While the harvest just finished was not as devastating as 2006/2007, it was another tough season with considerably below-average receivals of 3.5m tonnes.”

Mr Iwaniw told shareholders that ABB’s strategy for 2008 would be built around: malt, Prograin, New Zealand, Ukraine, pastoral & rural services, and seeds.

Responding to an unmet demand of the Asian malt market, ABB had signed a heads of agreement to build an 110,000 tonne capacity malt house at Minto, in Sydney’s outer south-west and a grain containerisation facility. (See separate media release)

“In addition, ABB will consider acquiring a majority stake in the Macarthur Intermodal Shipping Terminal group of companies MIST Group, which conducts a road and rail intermodal terminal at a site adjacent to the proposed Minto plant,” Mr Iwaniw said.

“Proceeding with these proposals, of course, will be subject to due diligence.”

Shareholders attending ABB’s AGM also heard about the company’s plans to further expand its activities in New Zealand, where it is building a feed mill in a joint venture with Mainland Poultry PCL and constructing its own storage facilities.

“Subject to the completion of transaction documentation, ABB will purchase NZ Grain & Seed (known as TAG) which has a major stake in New Zealand’s maize drying and trading market, and is viewed as a market leader,” Mr Iwaniw told shareholders.

“This acquisition adds further integration to ABB’s business model in NZ with TAG’s proximity to grain sources and key markets.”

29 February, 2008