Grower-owned grain co-op CBH Group, based in Western Australia, says it will continue its increased investment in is network, building on its record exports for 2022.
The co-op reported a record net profit after tax of AU$497.7m in its results for the year to September 2022, which it says was driven by “a record harvest, strong shipping demand and dramatic shifts in market fundamentals as a result of the Ukraine conflict”.
CEO Ben Macnamara said other unprecendented factors included the ongoing fallout from Covid-19 and domestic labour shortages, and the record harvest put the co-op’s network under pressure.
“Over the past year, the CBH team has shown their resilience and achieved new records, resulting in a really strong end of year result,” he added.
“For the first time in our co-op’s history, the record 2021/22 receivals of 21.3 million tonnes exceeded the logistical capacity of the network, with the size of the crop 50% bigger than the five-year average.
“Unsurprisingly, the record harvest placed pressure on the supply chain, but our people worked together to overcome all the challenges thrown at them to receive, store and outturn the crop, while also delivering the largest network investment programme on record, and navigating through significant global market volatility.
“I’m especially pleased to say that the team were able to achieve all this safely, with the team reporting the safest 12-month period on record.
“The record 18.1 million tonnes that the team delivered to our international and domestic customers is testament to the resilience of the network and should put to bed any commentary that the supply chain is broken.
“While we were able to mitigate some of the significant pressure throughout the year, it highlights the need to continue our increased investment in the network so we can improve our logistical capacity, particularly with moving grain from upcountry sites to port.
“This strong financial result positions us well to continue the investment in the network over the coming years and execute the vision of our ‘Path to 2033’ Strategy.”
The key driver for the surplus was the Marketing and Trading division, which reported a surplus of $437.9m. The division accumulated 50% of the record Western Australia crop and paid a record $5b to growers during the year.
The division will retain 62% of its surplus to bolster its equity position, allowing it to purchase the current and forecast larger crops, manage market risk and offer higher prices for growers.
The remaining 38% or $168m will be reinvested in the network in line with the CBH Strategy, which was refreshed during the year.
Operations recorded a surplus of $57.9m driven by record receipt of 21.3 million tonnes combined with strong shipping demand.
While the team safely received the record harvest, the size of the crop challenged the outloading programme, which was compounded by disruptions from Covid-related absenteeism and labour shortages, including truck and train driver availability.
“Despite these challenges, the team came together along with existing and new contractors and growers, to collectively export 16.7 million tonnes and deliver 1.4 million tonnes to domestic customers,” said Macnamara.
CBH’s fertiliser business reported an 11% increase in tonnes sold, with a new purpose-built facility in Kwinana due to start supply early this year.
In 2022, the co-op invested a record $348m to improve its network, including three site expansion projects, more than 230 sustaining capital projects, a large maintenance programme and preparation for another massive 2022/23 harvest.
“We currently have a once-in-a-lifetime opportunity to strengthen and reinvest in the co-operative,” said Macnmara. “It is that type of forward-looking vision that allowed the co-operative to deliver major projects such as the Kwinana Grain Terminal in the 1970s, which are still delivering value growers today.
“While we have invested significantly in the network over the past five years, we are committed to investing a further $4b over the next decade, which is crucial to increase the capacity of the network and deliver sustainable, long-term value for Western Australian growers.”