National rice processing and export group, SunRice, is preparing to expand its business footprint via more acquisitions after reporting a full year net profit of almost $55 million, generated by record revenue of $1.6 billion.
On July 1 SunRice takes full control of the big 53-year-old Papua New Guinea trading, processing and farming business, Trukai Industries, after paying $17.5m for the one third stake currently held by an investment group.
The company flagged other merger activities were on the cards in 2023-24 after a year for breaking records.
Grower shareholders were paid their biggest ever natural market paddy price of $461 a tonne for their 2022 medium grain crop, while the company will also pay a record fully franked total dividend of 50 cents a share to investors with tradeable B-class shares.
Bouncing back strongly from three seasons of badly drought-depleted yields, the 73-year-old international trader, miller and food processor's 12 per cent rise in post tax profit for the year to April 30 was underpinned by the 2022 harvest's big 675,000 tonne intake in southern NSW.
That crop was 65pc bigger than the prior season.
Northern hemisphere drought conditions also kept global markets hungry for rice and prices strong.
Managing director, Rob Gordon, has tipped SunRice's strong revenue and profit momentum to continue in 2023-24 and the following financial year.
Although the momentum may moderate, trading prospects were being helped by another solid 500,000t Riverina paddy crop recently harvested and now being milled, and southern NSW water storages at 90pc capacity.
"The 2022-23 financial year was an outstanding one for the SunRice Group, despite a challenging inflationary environment," said Mr Gordon, who retires in August after more than 11 years in the top job.
"It reflects the strength and resilience of our strategy and business model, and our efforts to deliver value for both classes of shareholders."
The big 2022 crop had given SunRice capacity to make a strong sales push back into key premium markets and expand into new territories where local supplies were squeezed by drought.
Revenue growth was also helped by changes to the company's product mix in some markets and a continued recovery in its CopRice stockfeed business, which returned to profit helped by earnings from its companion animal portfolio, ruminant feeds and a full year of revenue from the Pryde's EasiFeed division, bought 18 months ago.
"We are continuing to explore a well-developed pipeline of potential strategic acquisition opportunities, and reinforcing our established branded position," Mr Gordon said.
While external conditions had not supported more extensive merger and acquisition efforts in the past year, the company was not standing still.
It may also divest some assets it now considered non-core.
Group profitability for the current 2023-24 year was expected to be helped by improving shipping conditions and lower costs.
Business confidence was also buoyed by next summer's good Australian crop planting prospects, and water supply indicators suggested a fourth consecutive year of "abundant Australian rice production" through to 2025.
However, input costs such as raw materials and labour and interest rate costs were set to stay high.
Reviving global market volumes as US drought conditions eased also meant increased competition and lower prices, so the forecast for the recently harvested crop's pool price was back to the $390/t to $450/t range.
Meanwhile, SunRice's full acquisition of the Trukai business has involved a buyback of all 33.7pc of the shareholding held by Melanesian Trustee Services on behalf of Pacific balance fund.
Trukai, with its processing operations based in Lae and five sales centres around in PNG, is the country's biggest and best known rice brand, employing about 1000 staff, and also involved in crop research and development.
Mr Gordon said SunRice's decision to expand its investment in PNG reflected an "ongoing commitment to providing high quality, secure sources of rice to communities who rely on our products".
SunRice established the Trukai partnership in 1970 and had been proud of its longstanding presence, investment history and support for communities and food security in PNG.
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