Barley exporter, ABB Grain, says a 79% lift in first half earnings thanks to higher grain receivables has prompted it to lift its full-year earnings forecast.
The company has managed to battle the continuing influence of drought to benefit from the worldwide surge in grain prices over the past few months.
The company, which is planning to move into wheat exporting as the industry de-regulates, says it’s now looking for a $3 million boost in full year earnings to the range of $33 million and $38 million, for the year to September 30, from its previous forecast of $30 million to $35 million.
ABB shares rose as much as 8% after the announcement to a new 52 week high of $10.57.
The company seems to have convinced the market that its back on track after drought shattered the previous year’s result.
Half-year profit was $33.6 million, bouncing back following an 89% net profit fall to $7.3 million in the full year to September 30, 2007 because of the drought.
But with signs of drought still lingering and perhaps returning to parts of the grain belt across Australia, the optimism about the recovery in rural Australia will have to be tempered for some time yet.
Managing director, Michael Iwaniw said that "ABB Grain’s main business units – national supply chain, malt and grain marketing – all played a vital part in the company’s strong result, despite a difficult season, high commodity prices and soaring transport costs".
The main driver for the better result was the 94% rise in grain receivals.
The company said the result also reflected higher margins for malt and grain, but the 94% rise in grain receivals to 3.5 million tonnes for the 2008-09 season was the key.
More important those extra tonnes of grain (still down, though on the normal receivals of around 6 million tonnes) benefited from price rises of up to 70%.
That helped first half revenue jump 77% to $1.1 billion.
ABB says that unlike NSW, there’s been good rain in South Australia where the Australian barley crop is concentrated, meaning the chances for a better crop are much better than elsewhere.
ABB jumped by around 40% between February and the end of April, hitting a year high of $10.34, which was passed yesterday.
ABB though isn’t alone: wheat exporter AWB last week reported an 89% jump in net profit for the March half-year, after recovering from the drought and the Iraqi wheat inquiry costs, while the major Eastern States grain group, GrainCorp (which has launched a hostile bid for Ridley, another industry player) is due to report tomorrow.
And while there was good news from the still struggling rural sector, there were also some improved figures from a small company operating in the building and property sectors.
But the Norfolk Group Ltd is more into building services and that’s stood it in good stead, enough to see it produce a maiden net profit of $18.892 million for the 2008 fiscal year, and forecast a 10% rise in pre tax earnings for 2009.
Its products are more aimed at the commercial property and construction end of the market rather than the depressed housing side.
That beat forecasts in the group’s prospectus last year.
Norfolk listed on the Australian Stock Exchange in late July last year.
The group provides integrated electrical, communications, heating, ventilation and air conditioning, passive fire protection and property services and products.
Norfolk declared a first up dividend of 5.7c per share, which it said was in line with prospectus forecast.
Managing director Glenn Wallace said the result exceeded the company’s prospectus earnings, "underpinned by a focus on quality earnings and … demonstrated through continued margin expansion, despite increased interest costs".
The shares edged 11c higher yesterday to close at $1.41, well under the pre-crunch high of $2.24 late last year.
And Regional Express Holdings, which operates the Rex regional airline, says it expects to make its forecast 2008 profit, despite the impact of high fuel costs.
The airlines latest forecast came despite a 30% plus rise in fuel costs in the latest quarter.
Rex yesterday reported a 7.3% lift in net profit to $4.4 million for the third quarter of 2008, compared to the same quarter last year.
That was after a 30.9% rise in fuel costs to $8.9 million.
Rex executive chairman Lim Kim Hai said aviation in Australia and worldwide had encountered ”a veritable tsunami” of problems in the past few months including high oil prices, a severe shortage of pilots and the global credit crunch.
Despite this he says the company still expects to post an annual net profit in line with last financial year’s $23.6 million.
”With only one month left of the (financial) year, I am confident of meeting our earlier profit forecast, which called for net earnings to match that of the previous year’s,” he said.
For the nine months to March 31, the Rex group, which includes charter operator Pel-Air Aviation, the Dubbo-based NSW regional airline Air Link and an air freight business, reported a net profit of $16.1 million, down 4.2% on the previous corresponding period.
Rex has announced two fuel surcharge increases in less than a month due to the sustained surge in world oil prices, with the second boosting fares from yesterday by $4 to $40 per sector.
Rex shares rose 12% or 13 cents yesterday to $1.18, compared to its recent low of 97.5 cents.
