Down, but strong

By Deniliquin Pastoral Times

‘‘flexing of our international sourcing capability to offset the lower Australian crop’’ has been highlighted as one of the reasons why SunRice has delivered a stronger than expected result for its 2020 financial year.

The global food company announced late last week that while it has taken a hit in consolidated revenue and net profit after tax, it would still be able to deliver a fully-franked dividend of 33 cents per B Class Share declared.

Achieved through what has been a difficult year of low water availability and low production, and finishing during a global pandemic — all of which will limit the availability of

Australian grown rice — SunRice CEO Rob Gordon said it highlighted the ‘‘strength of the SunRice Group’s balance sheet and business model’’.

Consolidated revenue for SunRice Group in the 2020 financial year was $1.13 billion, which is down five per cent from the previous financial year.

Net profit after tax was $22.7 million, down 31 per cent year-on-year.

‘‘In what was an extraordinary year, these are strong results,’’ Mr Gordon said.

‘‘Not only did we have the second-smallest Australian rice crop on record, we also faced deteriorating economic conditions in some of our international markets, the impact of successive natural disasters and, in the final two months of financial year 2020, COVID-19.

‘‘The fact we have been able to maintain profitability against such challenging headwinds and declare a fully franked dividend in line with guidance highlights the ongoing strength of our business model and balance sheet.’’

SunRice says the financial results were driven by a combination of several factors, least of which was the ongoing drought conditions in the Riverina.

It led to the then second-smallest crop on record of 54,000 tonnes in crop year 2019, which is down 91 per cent 623,000 tonnes harvested a year earlier.

The 2020 crop is now the second smallest on record, at 45,000 tonne.

‘‘SunRice responded to the events of financial year 2020 with a significant coordinated effort — maintaining profitability and the safety of our employees in a demonstration of the agility, resilience and diversification we have built into our business,’’ Mr Gordon said.

‘‘Our international sourcing capability was rapidly flexed in response to the small Australian rice crop, with strategic expansion of our supply chains enabling us to backfill key markets and maintain continuity of supply.

‘‘To successfully meet global demand for our products of in excess of one million paddy tonnes of rice with only five per cent of this volume available from the crop year 2019 Riverina harvest is a clear demonstration of our strategy in action.

‘‘Unfortunately the continued drought, low water availability and high water prices in the Riverina led to the crop year 2020 crop being the new second-smallest on record, at 45,000 paddy tonnes.

‘‘Other highlights of the execution of our 2022 Growth Strategy included the Lap Vo Mill in Vietnam achieving profitability in its first full year of operation, and the further diversification of our supply sources to include South America.

‘‘We continue to invest in the Riverina, with new facilities completed or initiated in financial year 2020, including a new stabilised bran plant in Leeton, repurposing of the Coleambally Mill into a CopRice ruminant plant, and upgrades to our Leeton Rice Food facilities.

‘‘The group absorbed restructuring costs related to the reconfiguration of our Riverina operations, and one-off costs related to COVID-19, both of which weighed against overall profitability.

‘‘We are well placed to build on the solid results in financial year 2020 to ensure the continued strategic growth of the group and delivery of increased value to both A and B class shareholders.’’