CBH Group releases 2020 financial year results
15 December 2020
Supply chain fees remain lowest in the country – now approximately $20/t less than interstate bulk handlers
Group revenue excluding pool revenue $3.2b
Group surplus and net profit after tax $11.0m
Continued significant network development and improvement, with capital expenditure and maintenance $226m
Operations net loss after tax $10.9m
Marketing and Trading net profit after tax $12.2m
Group profit with CBH’s share $6m – the best result in the past five years
Net assets $1.8b
Reduced net debt to $6.7m (2019: $295.0m)
All Injury Frequency Rate (AIFR) declined to 7.2 (2019: 9.4), lowest on record
Safest harvest period on record with AIFR of 5.9 over this time
Continued improvement in average site cycle time with reduction to less than 40 minutes
Reduced stored grain inventory by 2mt, moving 11.7mt against harvest receivals of 9.8mt
Kept supply chain operating during the COVID-19 pandemic
The CBH Group today releases its 2020 Annual Report which outlines the Group’s financial and operational performance for the year ending 30 September 2020.
The Group reports a surplus and net profit after tax of $11 million for the year despite holding supply chain fees flat after being reduced by $4 per tonne in experiencing challenging external factors including a below-average harvest, international trade tensions and the COVID-19 pandemic.
CBH Chief Executive Officer Jimmy Wilson said the Group result was a good outcome given the headwinds experienced across the business.
“We responded quickly to the challenges presented through the year to keep the supply chain operating, developed new and existing markets for Western Australian grain, and continued to return value to our growers,” Mr Wilson said.
“We improved safety performance, recording our safest year on record, reducing our Frequency Rate from 9.4 to 7.2, and implemented a range of protocols and procedures to reduce the risk of COVID-19 among our people and communities.
“Our strong financial position was maintained, while keeping our supply chain fees the lowest in the country, now approximately $20 per tonne less than interstate bulk handlers the $4 per tonne reduction in fees in WA in 2018-19.
“We also invested $226 million in developing and improving the network, completing three expansion projects at Konnongorring, Moora and Watheroo, approximately 200 sustaining capital projects and a large maintenance program.”
Strong performance from Marketing and Trading and CBH’s investment portfolio including the Group and Blue Lake Milling was offset by results from the Operations division which was impacted by the below average harvest.
Following a poor growing season, Operations received its smallest harvest since 2012-13, with 9.8 million tonnes delivered into the network, impacting revenue for the division and resulting in a net loss of $10.9 million.
Mr Wilson said that while the financial result was aligned with expectations given the small crop size, the harvest was received safely and efficiently, with CBH reducing average site cycle times during harvest by six minutes.
“In addition to improving site cycle times, our aim was to meet growers’ site service expectations which we did through the offering of 51 grades across 114 sites, with improved on-site, online and technical services,” he said.
“While the harvest was below average, our Operations team moved close to two million more tonnes than were received to meet customer demand, resulting in a very low level of stored grain in the system prior to this current harvest.”
Marketing and Trading recorded a net profit of $12.2 million, representing a strong recovery from its 2019 financial year position. With 40 per cent market share of Australian bulk grain exports, the division maintained its status as Australia’s largest grain exporter.
Mr Wilson said the result was significant given global market factors during the year.
“The conclusion of the China anti-dumping investigation into Australian barley resulted in the unfortunate loss of our largest barley market, and the team has worked hard to find new markets for Western Australian barley,” he said.
“Marketing and Trading is well positioned to continue rebuilding equity in the business and navigate the challenges of ongoing trade tensions and the continuing impact of COVID-19 in other parts of the world.
“The positive financial result for Marketing and Trading was also supported by the division’s strong performance from its grower finance, pools and Swaption products.”
CBH’s fertiliser business increased its tonnes sold by 21 per cent this year, the fifth year of successive growth.
“Reducing growers’ on-farm input costs is part of CBH’s core strategy, and the ongoing support and success of CBH Fertiliser has given us the opportunity to pursue options for its expansion in the near future,” Mr Wilson said.
CBH’s grain processing investments benefitted from stronger demand this year, with Group returning to profit, with CBH’s share of net profit after tax being $6 million, and Blue Lake Milling ending the year with a profit of $2.7 million.
Mr Wilson said the 2021 financial year looked positive for the Group, with plans to continue developing the network and maximising the value of Western Australian grain.
“CBH is in a strong financial position with net assets of $1.8 billion and no long-term debt which enables us to maintain elevated investment in improving the network and the fertiliser business,” he said.
“We will continue providing efficient and effective services, and low-cost inputs for growers, while responding to any potential impacts of COVID-19 and strengthening markets for Australian grain with a focus on Asia and the Middle East.
The 2020 Annual Report is available on the CBH website