Grain growers’ cooperative releases FY2020 results

The CBH Group has reported on its financial and operational performance for the year ended 30 September 2020.

CBH Group reported 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 2018-19, and experiencing challenging external factors including a below-average harvest, international trade tensions and the Covid-19 pandemic.

CBH Group CEO, 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,” said Wilson.

“We improved safety performance, recording our safest year on record, reducing our All Injury 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 as a result of 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 Interflour 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.

Wilson said that while the Operations 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.

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,” said Wilson.

CBH’s grain processing investments benefitted from stronger demand this year, with Interflour 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.