GrainCorp spin-off United Malt Group (UMG) says its first half revenue and profit was sapped by COVID lockdowns across its Northern America and UK markets that forced widespread retail closures and lower in-venue alcohol consumption.
The company was split from former parent, ASX company Graincorp a year ago and immediately saw its first year of independence ravaged by the pandemic and social measures which skewed alcohol considerably in a short period of time because of the lockdowns of pubs, clubs and the emphasis of takeaway and home consumption.
So much so that total volumes during the six months to March 31 were below pre COVID-19 levels as continued reduction in on-premise consumption of alcohol had shifted malt product demand.
United Malt said its key operating geographies in North America and the UK were affected by the second wave of COVID-19 in early 2021, when daily infection rates were jumped above late 2020 levels.
Revenue for the six months to March 31, 2021, dropped 11% to $589.6 million, while underlying net profit – stripping out costs associated with the demerger from GrainCorp – was down 54% to $13.2 million.
Despite that fall, United Malt will pay an unfranked interim dividend of 2 cents a share on June 18. This is down from an unfranked dividend of 3.9 cents a share paid in December last year.
The dividend represents a payout ratio of 45% of net profit for the period, below the company’s dividend policy to distribute approximately 60%, which it said reflected the current impact of COVID-19 on earnings.
“As we foreshadowed at the annual general meeting, the lockdown impacts on volume and mix, together with the effects of the higher Australian dollar during the period and one-off costs affected the first half result,” United Malt CEO Mark Palmquist said (who used to be CEO of GrainCorp).
“While we are seeing emerging signs of reopening in some of our key markets, we remain prepared for the varying impact of the pandemic on customer demand, supply chains and our operations in the short term.“
United Malt is the fourth largest commercial maltster globally, with 12 processing plants in Canada, the US, Australia and the UK.
It also operates an international distribution business, which provides a full service offering for craft brewers and distillers, including malt, hops, yeast, adjuncts and related products.
Earnings before interest, tax depreciation and amortisation (EBITDA) of $52.7 million were slightly ahead of the guidance provided at the company’s February annual meeting.
The company said this includes the $6.3 million negative effect of the translation of earnings into Australian dollars, and one-off costs of $7.4 million related to the closure of the Grantham (UK) facility and transformation costs.
UMG shares edged up nearly 1.6% to $4.49 – not a bad outcome on a day when the ASX 200 slumped 134 points or 1.9%.
