Record grain handling pushes CBH earnings higher

by Susan Reidy
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CBH Western Australia Port of Albany
The CBH Group exports wheat through its terminal at the western Australia Port of Albany.
Photo courtesy of CBH Group. 
 
WEST PERTH, AUSTRALIA — Handling a record 16.6 million tonnes of grain in 2016-17 helped push CBH Group’s 2016-17 net profit after tax to A$91.3 million, an increase of 83% from the previous year.

Revenue for the year ended Sept. 30, 2017, increased 6.3% to A$3.5 billion (A$3.8 billion including Pool revenue), driven by a larger number of tonnes traded that was partly offset by lower grain prices.

CBH also said in its annual report that it had the largest-ever group surplus before rebates of A$246.7 million, up 120% from the previous year. It also reported a record total grower patronage rebate of A$156.3 million, up 150% from last year.

“Our cooperative had a strong 2016-17 financial year that culminated in the return of a record rebate to growers,” said Jimmy Wilson, chief executive officer of CBH. “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.”

After determining the average crop size will continue to grow, CBH said it has brought forward the planning and implementation of key projects.

“A significant amount of work will begin across the network after the 2017-18 harvest,” CBH said in its annual report. “We will also continue our network-wide sustainability works including shutdowns, road works and mechanical and electrical programs.”

CBH has adopted a Network Strategy, which focuses on maintenance and capital investment in the 100 core sites that receive more than 90% of the annual crop.

CBH focused in 2016-17 on the construction and upgrade of 25 key projects, which have delivered 300,000 tonnes of additional storage capacity.

Overall, CBH invested A$97.3 million in capital and maintenance works across the network, including additional storage and improvements in receival and out-loading efficiency.

Ed Kalajzic, chief financial officer, said the group’s record surplus and rebate was achieved through a number of factors, including the large harvest, strong business unit contributions, effective capital management and focus on cost reduction.

Larger crops reduce costs on a per tonne basis, especially for storage and handling services, he said.

Wilson said CBH demonstrated the agility of its supply chain through the safe and efficient handling of the record harvest, which continues a four-year trend of increasing crop sizes in the state.

“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,” he said.

Investments in grain processing saw an improvement in profitability in the year, Wilson said. The Blue Lake Milling oats processing business performed strongly and profits from the Interflour flour milling joint venture were reinvested for growth projects, including the U.S. $70 million Intermalt facility in Vietnam.

Safety was a top concern, Wilson said, and the company made a 49% reduction in total recordable injuries.

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