CBH Group records strong results with $133.8 million surplus
CBH has reported a strong surplus of $133.8 million driven by strong global demand for grain and an above average 2020/21 harvest.
CBH Acting Chief Executive Officer Ben Macnamara said the year did not come without challenges, and the fantastic result was testament to the partnership and resilience of Western Australian grain growers and the team at CBH.
“We have pulled together to overcome supply chain challenges, managed the uncertainty of COVID-19, delivered a large network investment program and contended with ongoing global market volatility to find new markets for Western Australian grain,” said Mr Macnamara.
“We experienced some supply chain issues throughout the year which highlighted the need to continue to invest heavily in our network and our people so we can adapt to external shocks.
“This strong financial result leaves us well positioned to continue our elevated rate of capital investment into our network over the coming years.”
A key highlight of the year was excellent performance from Marketing and Trading who capitalised on strong global demand for WA grain to deliver a surplus of $76.6 million despite facing ongoing market volatility and local supply chain issues.
“I cannot understate the strong result delivered by Marketing and Trading who have worked hard to replace the loss of the China barley market last year,” said Mr Macnamara.
“The team used their extensive network and long-term customer relationships to open brand-new markets, and access re-emerging markets, delivering great value to Western Australian growers.
“The Marketing and Trading result was offset to some extent by the supply chain issues we experienced during the peak shipping period which led to delayed vessel loading times.
“Marketing and Trading have worked hard to rebuild their equity position following the loss in 2019. With this year’s profit, Marketing and Trading have now reached their targeted level of equity, leaving them in a strong position to finance future accumulations and balance the risk of future market volatility.”
Operations recorded a surplus of $43.7 million driven by the larger than expected 2020/21 harvest of 15.1 million tonnes combined with strong shipping demand.
“Growing an above average harvest from below average rainfall is a testament to the innovative farming practices of WA growers and a good soft finish,” said Mr Macnamara.
“A series of compounding events including natural disasters and labour shortages due to COVID-19 impacted Operation’s ability to move grain to port efficiently, resulting in delayed vessel loading times through the year.
“We implemented a range of short-term measures to resolve the issues, with vessel turnaround times back within the targeted range prior to harvest starting.
“Despite these challenges, we were able to meet strong shipping demand, exporting 13.4 million tonnes via 333 vessels during the year.”
It was another big year for CBH’s fertiliser business with tonnes sold growing 47 per cent from last year.
“Fertiliser has gone from strength to strength growing on average 30 per cent year-on-year since it launched," said Mr Macnamara.
“This continued growth has enabled us to announce plans to expand our business through the development of a dedicated fertiliser storage facility in Kwinana, which is an exciting next step.
“This expansion opens the door for more Western Australian growers to benefit from access to secure supply and competitive pricing as we continue to grow our fertiliser business.”
This year CBH invested $254.2 million on improving its network, including completing three site expansion projects, more than 180 sustaining capital projects, a large maintenance program and dedicating a significant portion of work to prepare for a potentially record-breaking 2021/22 harvest.
CBH’s grain processing investments benefitted from stronger demand this year with Interflour Group delivering a year-end profit, with CBH’s share $7.8 million, and Blue Lake Milling ended the year with a net profit after tax of $6.2 million.
The coming year looks positive for CBH with a forecast record crop still being harvested.
“We are in a strong financial position with net assets of $1.9 billion and no long-term debt,” said Mr Macnamara.
“We remain focused on the core of our business, which is our storage and handling network, marketing and trading Western Australian grain, and providing low-cost fertiliser for WA grain growers,” he said.
“We will continue to invest heavily in the network next year with a focus on projects that increase our outloading capability, so we can move grain from upcountry sites to port faster to keep pace with market demand for WA grain,” he said.
“Our immediate focus is safely receiving the remainder of this year’s harvest.”