AWB up 4% with news of doubling profit

Shares in AWB gained over four per cent in early trading after the wheat exporter and agricultural services group reported that full-year net profit more than doubled.

The stock was 12 cents, or 4.6 per cent higher, at $2.73 at 1016 AEDT as the benchmark S&P/ASX 200 Index increased 0.93 per cent.

AWB shares have declined 6.8 per cent this year, compared with the 44 per cent plunge in the ASX 200.

The Perth-based company said net profit rose to $64.3 million in fiscal 2008, from $27.1 million in the previous year.

That's a 137 per cent rise in annual profit, which AWB is putting down to strong demand for fertiliser, seeds and farm chemicals as drought conditions eased.

"This is a strong result particularly in light of commodity price volatility, variable weather conditions and regulatory change," chairman Peter Polson said.

During the year, AWB changed its constitutions and normalised its shareholder structure to one class, from two classes.

"Structural reform of the company over the past 12 months ensures the company is well positioned for future growth," Mr Polson said.

In the year ended September 30, revenue rose 47 per cent to $6.8 billion.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 32 per cent to $228.5 million.

Chief executive Gordon Davis said the company's overall result was strong, and that the performance of the Landmark Rural Services unit was a standout.

"The pleasing thing was that the result was achieved while the company continued to go through considerable change," Mr Davis told journalists.

These changes included the company's move out of statutory marketing, the reform of its constitution and the move to single class of shareholders.

Landmark, which sells farms merchandise such as fertiliser, produced its best ever annual result on the back of increased agricultural activity across the country.

Its EBITDA rose 65.4 per cent to $90 million, up 64.5 per cent from $54.7 million in fiscal 2007.

AWB's financial services arm generated total EBITDA of $42.1 million, up from $32.5 million.

Its commodity management unit produced EBITDA of $100.9 million, up 14 per cent, due to strong sales of wheat, canola and pulses.

AWB did not give any earnings outlook for the new year.

Mr Davis said that was because the company was reliant on factors such as the weather, which was out of its control.

But he was hopeful the south east of Australia, which has had dry conditions for most of the past 10 years would return to more normal weather conditions.

This would help the company's business, he added.

Mr Davis said AWB was pleased with its performance under the new wheat marketing arrangements as its wheat pools had been well supported by Australian farmers.

"Our overall strategy remains to increase shareholder returns by continuing to rebuild and grow the business domestically and internationally," he said.

Commenting on the legal issues related to the Iraq oil for food scandal, Mr Davis said it was pleasing that the three class actions in the US had been dismissed, although one was subject to appeal.

"They were the major concerns in terms of costs and we see them tapering off as they move into the past," he said.

The company declared a final dividend of five cents, up from four cents in the same period in fiscal 2007, taking the total for the year to nine cents.