AWB Ltd has joined the ranks of rural groups cleaning up their financial house by revealing big write-downs and a big red bottom line.
The company yesterday revealed a full-year loss because of one-time charges for its Brazilian and fertilizer units.
Elders and Incitec Pivot have revealed big one time losses and write-downs in their 2009 results.
In both cases, the losses were in part linked to the global slump in fertiliser prices (and ammonium nitrate), which forced impairment tests to be done and charges to be made against certain assets.
Elders and AWB revealed the write-downs on their fertiliser Joint Venture, Hi-Fert late last week.
The company had a net loss of $250.8 million ($234 million), in the year ended September 30, from net profit of $60.3 million, a year earlier.
The result was close to the November 13 guidance update that it expected a loss of about $251 million.
AWB is closing its loss-making Brazil unit and selling its fertilizer joint venture.
The company forecast 2010 profit before tax and one time-items for its continuing business of $95 million to $115 million.
AWB said the result takes into account the discontinuing businesses AWB Brasil and Hi-Fert, significant goodwill impairment for Landmark Financial Services, a write down in Hi-Fert, and other significant items in relation to restructuring and legal costs associated with legacy issues.
However, for continuing businesses – Landmark and Commodities Management– the company reported a profit before tax and significant items of $93 million for the full year to September 30 with a particularly strong performance by AWB Geneva.
AWB Managing Director Gordon Davis said that while the 2009 full year result was disappointing, the company is forecasting a full year 2010 profit before tax and significant items for its continuing businesses of $95 million – $115 million.
"This is before taking into consideration the benefit of the recent capital raising which should generate interest savings of $20 million – $25 million.
"In a year where the financial and climatic environment remained particularly challenging, the performance of AWB was mixed, affected by the availability and cost of credit, lower input margins, a rising Australian dollar, decreasing commodity prices, weak demand for fertiliser and adverse seasonal conditions on the east coast of Australia," Mr Davis said.
"Looking forward we have set the platform for more sustainable growth by reducing our net corporate debt by over $250 million and implementing a number of successful cost reduction initiatives.
"In addition, after the end of the financial year the proceeds of a capital raising further reduced debt, strengthened our balance sheet and significantly improved financial flexibility.
"We are clearly focused on growing our continuing businesses and developing a regional agribusiness with more sustainable growth characteristics for the benefit of shareholders," Mr Davis said.
AWB shares fell half a cent yesterday to $1.255.
Shares in Patties Foods hit a 52 week high yesterday after the company surprised with a sharp upgrade in earnings for the six months to December.
News of the 40%-plus rise in earnings saw the shares rise more than 10%, or 11.5 cents, to $1.18 after hitting an intra day high of $1.20, the highest for a year.
The company told the ASX that "based on actual management accounts to the end of October 2009 and estimates for November and December 2009, it currently expects the trading for the six months to 31 December 2009 to be a net profit after tax (NPAT) in the range of $7.25m to $8.75m".
The company said that the normalised NPAT for the first half of the 2008-09 financial year was $5.3m and the reported NPAT was $4.7m.
Patties said the profit improvement was primarily driven by stronger sales, improved manufacturing efficiencies, lower interest charges and a rising Australian dollar.
"This guidance is subject to audit review of the first half FY10 Accounts and reasonable trading conditions for the balance of the period," the company added.
