FORMER export wheat monopolist AWB Ltd has plunged $250 million into the red during the first year of export deregulation.
AWB managing director Gordon Davis said the after-tax result was "disappointing", reflecting tough economic conditions and several one-off factors.
"In a year where the financial and climatic environment remained particularly challenging, the performance of AWB was mixed," Mr Davis said last week while releasing the financial results for the year to end of September.
Credit problems, lower input margins, the rising dollar, falling commodity prices, weak demand for fertiliser and poor seasonal conditions all made life difficult for AWB, Mr Davis said.
The main drains on revenue were the wind-down of AWB's Brazil operation, the write-down of poor-performing Hi-Fert, which is due to be sold, and problems with Landmark Financial Services.
There were also restructuring costs and legal costs related to class actions coming out of the Oil-for-Food scandal.
But Mr Davis said AWB's ongoing businesses, notably wheat marketing and Landmark, had turned a before-tax profit of $93 million, despite a tough trading environment, and were expected to do better during the next year.
AWB's grain marketing and pool activities had notched up a "good result" in the first year of export deregulation, Mr Davis said.
The company had acquired more than 25 per cent of the national 2008-09 wheat production, benefiting from its "strong relationships with growers and customers", he said.
Earnings before interest and tax in this area were still down 20 per cent to just under $67 million, while there were gains in other areas improved returns from AWB's chartering and rail investments and a 50 per cent jump in earnings by AWB's Geneva office.
Within Landmark, the livestock business was a standout among a generally subdued performance, with earnings up 20 per cent.
Mr Davis said AWB was well-positioned to take advantage of growth opportunities, especially in Asia.
The company had reduced its net debt by more than $250 million and implemented successful cost-cutting measures during the past year, he said.
It had also recently raised $459 million in equity capital, which would further reduce debt and cut interest costs by $20-25 million.
