Sugar boss mars last results with profits warning

Maryborough Sugar Factory’s outgoing chief executive, Mike Barry, marred his last results release with a profits warning, cautioning that Cyclone Yasi had not been the end of the group’s weather setbacks.

Mr Barry, who is to quit the group at the end of November after three years in charge, said a "very challenging" season had been marred by a wet and overcast autumn besides damage caused by February’s Cyclone Yasi, Australia’s most-costly storm ever.

"All these factors are leading to unprecedented-low crop yields," Mr Barry said, with the newly-acquired South Johnstone mill, one of the group’s four plants, now set to crush 715,000 tonnes of cane, less than half the 2010 figure.

The group cut by 324,000 tonnes to 2.90m tonnes its cane-crush forecast for the year, and slashed its estimate for 2011 earnings before interest, tax, depreciation and amortisation to Aus$7m-11m, from guidance in May of Aus$18-22m.

The year was going to be "difficult financially and operationally" in St Johnstone and Mulgrave mills, where the lower cane crop was leaving the mills working five days a week rather than the usual seven-day operations during harvest period.

Deeper in the red

The comments came as Maryborough revealed that its after-tax losses had grown by 61% to Aus$6.1m in the first six months of 2011, held back by one-off costs, relating to factors such as the closure of the Bundaberg mill, besides weather-related factors.

The group spent an extra Aus$500,000 in fuel costs during the first couple of weeks of the crushing season, a reflection of the wet weather at the start of 2011.

However, Maryborough forecast brighter times ahead, as it reaps better returns from its acquisitions, extra cane plantings by farmers, and cane production expected to recover next year to "average levels".

"We are confident that the company has now established a strong foundation from which to grow further the business," Mr Barry said.

‘Clear skies’

Even in 2011, the "weather forecast is good until the end of the 2011 season harvest period", in mid-November, the group said.

Short-term Australia & New Zealand Bank noted that weather outlook for Australia’s sugar producing regions, in Queensland, where cane harvesting started in May, was for "clear skies for at least the next week".

"This follows a week of no rain and uninterrupted harvesting in the Burdekin, which is what this region needs to get through the projected 10m tonnes of cane for harvest before the wet season starts again."

Maryborough shares closed down 1.5% at Aus$3.31 in Sydney.

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