CBH Group rebates $95 million back to Growers

By: "Farm Tender" News
Cattle News
Jan 21, 2019
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Summary:

* Efficiently received and managed 13.3 million tonne harvest

* Retained strong financial position with Group surplus before rebates of $128 million

* Significantly increased network capital investment and maintenance to $212 million

* Delivered strong rebate to growers of $95 million in total or up to $10.50 per tonne

* Increased competitive standing of Western Australian growers with $4 per tonne reduction in storage and handling fees

* CBH Fertiliser delivers profit of $300,000, driven by significant sales growth

The CBH Group has today reported a Group surplus before rebates of $128 million for the 12 months to the end of 30 September 2018. The vast majority of this surplus was passed back to growers in the form of a $95 million rebate, resulting in Net Profit after Tax and Rebates of $33 million.

The financial results were driven by strong contributions from the Operations and Marketing and Trading divisions, while much needed investment in the supply chain more than doubled.

Revenue for the financial year increased 9 per cent to $3.8 billion driven by significantly higher year-on-year grain prices and slightly higher tonnes traded by CBH Marketing and Trading. This was partially offset by lower grain handling and freight revenue.

Chief Executive Officer Jimmy Wilson said the $128 million Group surplus before rebates was a good result from the business which had focused on improving service for growers as well as reducing costs during the year.

“It’s pleasing to see that we can continue to deliver strong financial results year-on-year for our grower members,” Mr Wilson said.

“Throughout the year, we have been focused on progressing towards a smarter, leaner and healthier organisation so we can give our growers every advantage to keep them internationally competitive.

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“The full year results confirm that our transformation is progressing well and that CBH can continue to deliver low cost outbound costs & good marketing and trading results for growers.

“We also continued to optimise our storage and handling network, investing significantly to improve the service and efficiency of our sites, make our fees even more competitive and deliver tonnes to port when its most needed.”

In the 12 months to the end of September 2018, CBH invested a much needed $212 million into network capital and maintenance.

This comprised the construction of an additional 650,000 tonnes of permanent storage to the network, the construction of 1.1 million tonnes of emergency storage, 24 throughput enhancement projects and ongoing maintenance at key sites.

Mr Wilson said the Operations and Marketing and Trading business units each contributed strongly to the Group surplus before rebates, with Operations reporting a $91 million surplus before rebates, and Marketing and Trading recording a $51 million surplus before rebates.

“Our Operations division performed well during the year with the efficient receival of 13.3 million tonnes of grain, 96 per cent of which was received at the top 100 sites in the network,” Mr Wilson said.

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“This was achieved in a season marked by mixed weather conditions and the roll out of new digital service options for growers such as the CDF app and Paddock Planner, which will help with planning and efficiency gains in the future.

“The Marketing and Trading division had an outstanding year, returning an increased portion of its surplus to growers with a record rebate of $7 per tonne or $48 million in total,” Mr Wilson said.

“During the year, the division was focused on balancing the significant increase in domestic demand with the requirements of our international customers, and we remain confident there is sufficient crop to supply both.”

The Marketing and Trading division reported continued growth for CBH Fertiliser, with tonnes sold increasing 45 per cent to 90,000 tonnes in the 12 months to the end of September.

“Since starting operations in 2015, CBH Fertiliser is now profitable following solid growth during the year, primarily driven by confidence in the product, a wider product range and quicker site turnaround times,” Mr Wilson said.

Commenting on CBH’s investments, Mr Wilson said the portfolio had a mixed year.

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“With the exception of Interflour Group, all our investments had a profitable year with each business reinvesting the profits for future growth,” Mr Wilson said.

“Interflour faced headwinds from a number of fronts including challenging trading conditions stemming from a highly competitive flour milling industry in Asia and adverse currency movements, while recently commissioned processing facilities have not been generating expected profits.

Interflour reported its first loss since CBH acquired its interest in 2005, however, the business has commenced a turnaround plan to return to profitability, with the support of CBH.

Looking ahead, Mr Wilson said CBH was well positioned and would keep its focus on finding efficiencies within the supply chain and continue delivering the Network Strategy.

“We remain committed to reducing paddock to port costs for our growers and working towards our goal of removing ongoing costs of more than $100 million from the business,” Mr Wilson said.

“In addition, we are continuing the elevated work pace on the Network improvement to deliver an optimal supply chain and help keep our growers internationally competitive.”

www.cbh.com.au