Adelaide-based ABB Grain yesterday revealed it was continuing to diversify away from concentrating on barley and grains with a move deeper into the wool industry.
ABB Grain said it will buy Western Australian-based Standard Wool Australia's broking and trading arm, Stawool Brokers, for an undisclosed sum.
Stawool is the second-largest wool broker in WA, and gives ABB geographic diversification as well.
"It's widely acknowledged that this business is a leader in its field and is performing extremely well," said ABB general manager, pastoral and rural services, Steven Read.
"It's a first-class acquisition for ABB, enabling the company to further grow its rural services division into Western Australia."
ABB has been diversifying into other agricultural sectors besides grain, which has been significantly impacted by the drought and volatile prices, especially in South Australia where the barley crop has been hit two years running.
Last year ABB established a wool export arm with the acquisition of Adelaide Wool Company, the second biggest wool company in South Australia.
The company on Monday revealed an 89% drop in annual profit, thanks to the worsening drought across Australia and a move into the New Zealand deed industry in a joint venture.
ABB said net profit for the September 30 year was $7.3 million, down from $66.7 million in the 2006 year. It says it will now look to diversify its operations into New Zealand and Europe, as well as seek possible acquisitions
"There's no doubt the drought, and the volatile market activity that followed, has had a significant influence on our net profit," managing director Michael Iwaniw said,
ABB Grain said grain receivals for 2007 totalled 1.8 million tonnes, sharply down on the 6.6 million tonnes handled in 2006.
Revenue for the year was $1.522 billion, up 32% and ABB Grain declared a partly franked final dividend of 7.5c per share, taking to total for the year to 14.9c.
Mr Iwaniw said a strong performance from ABB's expanded malt operations, and growth in non-grain activities and value adding services were real positives to come from the year.
"We are looking to extend our New Zealand operations to capitalise on the burgeoning compound feed industry," he said and ABB Grain's Ukrainian joint-venture with agro-industrial group Soufflet complemented its Australian export program and should allow it to grow in the Europe.
"Both of these activities will strengthen our presence in the global grains industry and, coupled with our knowledge and experience, will drive further value for the company," Mr Iwaniw said.
"Our pastoral and rural services division should continue building momentum as we look for further opportunities and possible acquisitions."
Mr Iwaniw said the company was also well positioned to capitalise on other non-grain activities to help diversify the business.
"With the establishment of a Pastoral and Rural Services division … which returned a $2.5 million profit before tax, we are looking to provide a greater amount of services to growers," he said.
"Synergies between ABB's existing customer network and our varying services on offer are already being realised, and this provides real growth opportunities for the future."
On Monday ABB also announced that would partner with New Zealand's biggest (egg) layer producer, Mainland Poultry's PCL Feeds Division, to build a A$30 million state-of-the-art feed mill in South Auckland. ABB will be the majority partner in the joint venture with a 75 percent stake.
ABB said it will invest a further A$10 million in purpose-built storage facilities in the ports of Tauranga and Taranaki. Each will be able to store more than 30,000 tonnes of product.
ABB has traded with, and had a presence in, New Zealand for several years with offices in Auckland and Christchurch operating as ABB NZ*.
Managing director, Michael Iwaniw, said the investments secure ABB's position as an integrated supplier of bulk agri-products in the New Zealand market. They also enable ABB to increase its range of grains and meals for sale or trade and capacity to manufacture processed animal feed products.
PCL Industries (NZ's largest poultry egg producer) is a significant player in that country's feed business and a company with which ABB NZ has had a long term relationship.
Mr Iwaniw said that the new South Auckland mill would have an annual capacity of 150,000 tonnes and be operational by mid-2009.
"By the end of 2008, ABB in its own right will have major storage and bulk handling facilities at New Plymouth, Mount Maunganui and South Auckland, all positioned near major import ports. They will be ideally placed to service the key dairy areas of Taranaki and the Waikato," he said.
"By completing our own facilities across the supply spectrum – from feed sourcing and supply, our traditional strengths – to now include processing and distribution, this will provide us with a sound base for further expansion.
