E-Malt.com News article: 1858

Australia's worst drought in 100 years has taken its toll on the country's top grains companies, halving AWB Ltd's 2002-03 profit and pushing storage group GrainCorp Ltd into the red. But both results were slightly ahead of expectations and the two companies forecast a big pick-up in the current year after the drought broke in many areas, Reuters posted on November 26. "The drought had a dramatic impact," said Tom Keene, the managing director of GrainCorp, which stores and handles grains across Australia's eastern states. GrainCorp reported an annual loss of A$18.2 million, compared with a profit of A$48.6 million in the previous year.

AWB Managing Director Andrew Lindberg said the group, Australia's monopoly wheat exporter, posted a good result, given that drought cut 2002-03 wheat production by 61 percent to just 9.7 million tonnes. AWB's net profit for the year to September 30 fell 59 percent to Aust. $43.9 million ($31.6 million). For the current year, AWB upped its profit forecast to A$110-A$120 million, from A$100-A$110 million previously, while GrainCorp forecast a return to profit but give no figures.

Australia is the second largest wheat exporter in the world after the United States. It is also major exporter of barley and canola. All three winter crops are now being harvested.

AWB shares are up 0.5 percent to A$4.37 Wednesday afternoon, while GrainCorp shares have slipped 0.4 percent to A$13.60 in a flat overall market. "The AWB result is a bit ahead of expectations. They upgraded their outlook for next financial year, which is very positive. On the whole a pretty good result," said one analyst, who declined to be named. AWB held its forecast for the current 2003/04 Australian wheat crop at 22-24 million tones -- more than double the previous season.

GrainCorp, however, trimmed its forecast of grain arrivals at its silos from the current crop in New South Wales, Victoria and Queensland to 10.5 million tonnes from 11.1 million tonnes as dry conditions persist, especially in New South Wales. GrainCorp said grain received in New South Wales and Victoria states last year fell 83 percent to 2.1 million tonnes, from over 12 million tonnes the previous year. The effect of drought would continue into the first half of 2003-04 for GrainCorp, whose stocks were down to 1.2 million tonnes from 4.5 million tonnes a year earlier. "This low carry over will result in a subdued recovery in our financial performance," Keene said.



01 December, 2003