15/01/2018 - 15:39

CBH doubles surplus on big grain season

15/01/2018 - 15:39

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Grain handling cooperative CBH Group has more than doubled its operating surplus to $247 million in the year to September 2017 on the back of a big harvest, with grower rebates of $156 million.

CBH doubles surplus on big grain season
A big capital investment in the company’s receival and transport network is continuing,. Photo: Attila Csaszar

Grain handling cooperative CBH Group has more than doubled its operating surplus to $247 million in the year to September 2017 on the back of a big harvest, with grower rebates of $156 million.

The farmer-owned cooperative received 16.6 million tonnes of grain in the year, up about 22 per cent from the previous year.

Revenue was 6.1 per cent higher to just under $3.5 billion.

The biggest contributor to the big operating surplus was the storage and handling division, with a surplus of about $198 million, while marketing was in the black to the tune of $58 million.

Grain processing delivered an additional $8 million, a big improvement on the previous year when it roughly broke even, while the fertiliser business made a small loss.

Those numbers do not include centralised, administration costs, however.

The strong financial performance supported a very big rise in the cooperative’s rebates to growers, which increased 150 per cent on the previous year.

At $156 million, the rebates were equivalent to $12.75 per tonne, but CBH is unlikely to replicate that performance in the 2018 financial year, a spokesperson for the cooperative said.

CBH chief executive Jimmy Wilson, who started in that role in October, said reducing costs across the network, expanding fertiliser and funding services for growers and improving returns from its processing investments would be key priorities.

A big capital investment in the company’s receival and transport network was continuing, although the pace of the spending slowed in 2017 as the business focused on capital management discipline, Mr Wilson said.

“We are very well positioned to deliver on the network strategy, the intention is to continue to do that, and continue to spend $750 million … over the next five to 10 years,” Mr Wilson told a media conference today.

“In 2017, there was a lot of reflection that occured around the network strategy, there was a deep focus around making sure we were doing the right things.

“The spending actually reduced, form a capital perspective, on the previous year.

“I’m very confident that the team has (now) focused on the right areas and we should see that spend (in 2018) increase over the 2017 year and probably over the 2016 year.”

Mr Wilson said one big challenge was an increased flow of grain into contestable markets such as the Middle East, meaning the cooperative would need to keep a close eye on its competitors, for example in the Black Sea region.

The grain production output in the 2018 season, which is currently being harvested, would likely be down on last year, he said.

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