Bumper harvest means bumper returns for cooperative’s grower members
Western Australian grain logistics cooperative CBH Group has reported a record surplus before rebates of $247.6 million for the year ending September 30.
A record 16.6 million tonnes of grain was delivered to the co-operative’s storage and handling facilities.
CBH returned a record rebate of $156.3 million or up to $12.75 a tonne.
Post-rebate, net profit after tax (NPAT) was $91.3 million, an increase of 83 per cent on the previous year. Revenue rose 6.3 per cent to $3.5 billion ($3.8 billion including Pool revenue), driven by a larger number of tonnes traded that was partly offset by lower grain prices.
CBH CEO Jimmy Wilson says the Group surplus before rebates of $247.6 million was a good result that was driven by a record harvest and a disciplined approach to cost and capital management.
“Our co-operative had a strong 2016-17 financial year that culminated in the return of a record rebate to growers,” Wilson continues.
“Our Operations and Marketing and Trading divisions as well as our investments performed well, with each returning a rebate to growers in the face of an international grain environment that continues to provide challenges.”
Before rebates, the divisions reported surpluses of $197.6 million and $58.3 million respectively.
Wilson says CBH demonstrated the agility of its supply chain through the safe and efficient handling of the record Western Australian harvest, which continues a recent trend of increasing crop sizes in the state.
“In the past four years Western Australian growers have delivered above average crops, with crop production growing faster than initially modelled in certain areas,” he adds.
“While managing such a large amount of grain can create challenges, CBH has responded by building additional storage and catering for unexpected events such as flooding and frost.
“Above all, the safety of our people is paramount, which is why we’re pleased with the substantial improvement in our safety performance with a 49 per cent reduction in our All Injury Frequency Rate, well under target at 11 at the end of the year.
“Marketing and Trading continue to maintain market share despite the intense competition from the Black Sea region that resulted in high global grain stocks and historically low prices.
“Grain processing investments recorded an improvement in profitability, with our oats processing business Blue Lake Milling performing strongly, and profits from our Interflour flour milling joint venture reinvested for growth projects including the US$70 million Intermalt facility in Vietnam.”
According to CBH CFO Ed Kalajzic said the group’s record surplus and rebate were achieved through factors including the large harvest, strong business unit contributions, effective capital management and focus on cost reduction.
“The record 16.6 million tonne harvest was a significant driver of our financial results as larger crops reduce costs on a per tonne basis, particularly for our storage and handling services,” Kalajzic says.
“We also effectively managed costs during the harvest to make sure we operated efficiently and our disciplined approach to capital management meant we can rebate more of the Group surplus to growers.”