AWB reports massive increase in profit

Wheat exporter and agricultural services group AWB Ltd has more than doubled its annual profit, benefiting from strong demand for fertiliser, seeds and farm chemicals as the drought eased.

AWB shares were up 16 cents, or 6.13 per cent, to $2.77 at 1447 AEDT after the company said on Wednesday that net profit rose to $64.3 million for the 12 months to September 30 from $27.1 million in the previous year.

Chief executive Gordon Davis said the overall result was strong, and the performance of the Landmark Rural Services unit, which provided services to farms such as fertiliser sales, was a standout.

Landmark benefited from increased agricultural activity across the country, AWB said.

"The pleasing thing was that the result was achieved while the company continued to go through considerable change," Mr Davis said.

The federal government cancelled the company's monopoly on wheat exporting in 2006 following revelations of bribes paid to Saddam Hussein's regime in Iraq.

To expand the business, AWB moved into handling other commodities such as barley and maize as well as bolstering the service to its existing wheat growers and improving the performance of Landmark.

AWB shares have declined 6.8 per cent this year, compared with the 44 per cent plunge in the S&P ASX/200.

Mr Davis said AWB was pleased with its performance under the new wheat marketing arrangements as its wheat pools had been well supported by Australian farmers.

"Our overall strategy remains to increase shareholder returns by continuing to rebuild and grow the business domestically and internationally," he said.

In the year ended September 30, revenue rose 47 per cent to $6.8 billion.

Landmark produced its best yet result on the back of increased agricultural activity. Its earnings before interest, tax, amortisation and depreciation (EBITDA) surged 66 per cent to $90 million, contributing over half AWB's increase in EBITDA to $228.5 million.

AWB's financial services arm increased EBITDA by 30 per cent to $42.1 million, mainly as the company completed two year's worth of wheat pools in one year.

Its commodity management unit produced EBITDA of $100.9 million, up 14 per cent, due to strong sales of wheat, canola and pulses.

AWB did not give any earnings outlook because it was reliant on factors such as the weather.

Mr Davis said he was hopeful south east of Australia, which had dry conditions for the past 10 years would return to more normal weather and this would help the company's business.

Mr Davis said it was pleasing that the three class actions in the US relating to the Iraq oil-for-food scandal had been dismissed, although one was subject to appeal.

"They were the major concerns in terms of costs and we see them tapering off as they move into the past," he said.

The company declared a final dividend of five cents, up from four cents in the same period in fiscal 2007, taking the total for the year to nine cents.