ABB Grain has cut its 2009 full year earnings guidance by around 30% due to the emergence of difficult market conditions in parts of rural Australia.
ABB said yesterday guidance for 2009 full year net profit after tax was now between $43 million and $53 million, down from a range of $53 million and $63 million issued in May.
The revised guidance also forecasts underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $125 million and $145 million.
Included in the guidance are one-off expenses of approximately $8 million after tax, representing due diligence and transaction costs related to the bid from Canadian group, Viterra.
ABB managing director Michael Iwaniw said the downgrade was a result of weaker demand for Asian malt and the impact of drought in Australia.
"We’ve experienced slower malt deliveries against contracts in the Asian region due to the global financial crisis resulting in lower growth in beer consumption," Mr Iwaniw said.
"Despite this, we still expect to generate malt earnings equivalent to last year’s record and anticipate the growth slowdown to be short-term in nature as longer term beer consumption projections remain strong.
"In addition, the recent past droughts have dampened rural input sales, including fertiliser, agricultural chemicals and merchandise.
"Growers have shown a reluctance to commit to these purchases in advance of greater certainty around cropping conditions."
ABB Grain has agreed to a stock and cash offer from Viterra Inc, Canada’s largest grain handler.
"Even with the impact of fertiliser losses and difficult seasonal conditions this year, the outlook is still equivalent to last year’s earnings," Mr Iwaniw said.
"This remains a solid base to build on, with recent good rains across Australian grain growing regions, including South Australia, providing some optimism for a return to a more normal-sized crop year.
"The proposed scheme process with Viterra remains on track with the scheme booklet expected to be released in late July/early August and a shareholder vote in early September," Mr Iwaniw said in the statement to the ASX.
ABB shares eased 2.6%, or 25 cents to $9.10.
Meanwhile it was a different story for online betting agency Centrebet International which said yesterday that 2009 earnings are expected to be at the upper end of its guidance, after a strong rise in revenue in the year.
The company also predicted strong profit growth in the 2010 financial year as it looks forward to increasing market share of the Australian online betting market .
Centrebet said earnings for the year ended June 30, 2009, are expected to be at the upper end of its guidance for a net profit before one-offs of $10 million to $11 million.
Annual revenue rose by 6% to $66.2 million, driven by growth in the Australian online betting market which jumped 23% to $32.9 million for the year.
"Australian on-course revenue of $3.3 million, down by 31%, representing 5% of total revenue," the company said
"European revenue (excluding poker) of $26.1 million, flat compared to FY08, representing 39% of total revenue. European wagering revenue declined due to a lower win rate, particularly in non-core European markets, off-set by growth in Casino revenues
"European poker revenue of $3.8 million, down by 17%, representing 6% of total revenue," it said.
Centrebet managing director Con Kafataris said the company had responded well to recent deregulation in the betting industry.
"While deregulation of the industry has presented some short term cost challenges, it has created an attractive outlook for Centrebet to continue to grow market share," he said in the statement.
"We expect the overall industry to show strong growth over the medium term and Centrebet is well positioned to maximise our share of that growth through customer focused product offerings, targeted marketing investment and disciplined risk and cost management."
Centrebet said a successful launch in May 2009 of fixed odds management contracts with the TAB and new cost controls also would boost its 2009-10 profit.
It sees continued growth in its Australian online revenue above industry growth estimates.
"The TAB’s fixed odds management contracts have commenced with a positive start," the company said.
This supported its estimate to deliver incremental earnings before interest, tax, depreciation and amortisation for 2009/10 in excess of $1.7 million and in excess of $1 million in net profit.
In 2007/08, Centrebet reported net profit by up 16.8% to $13.01 million.
The shares rose 3.5 cents, to 93.5 cents.
