Sugar group profits hit by big wet

AUSTRALIA'S third-largest sugar company has been dealt another blow after a horrific summer of natural disasters, with Maryborough Sugar Factory's cane crush downgraded after a wet February and March.

The worse than expected cane crop, combined with a dip in the sugar price, saw MSF yesterday downgrade its 2011 full-year earnings guidance from normalised EBITDA of between $27 million and $33m to between $18m and $22m.

Chief executive Mike Barry told the company's annual general meeting in Gordonvale, 25km south of Cairns, that the company had already downgraded its crop forecast immediately after Cyclone Yasi hit the region in February.

Mr Barry said that predicted 5 to 10 per cent contraction was expected to be balanced by a high sugar price, so earnings weren't revised.

However, higher than average rainfall during the key growing months following the cyclone resulted in the expected 3.6 million tonne cane crop being reduced to 3.2 million tonnes.

Chairman James Jackson told the AGM that the weather had not been kind to the canegrowers in the South Johnstone region, south of Cairns.

"Since Cyclone Yasi we have experienced wetter conditions and lower sunshine hours than average," Mr Jackson said.

The total crushing capacity of MSF's four sugar mills is 4.7 million tonnes.

MSF, Australia's second-largest sugar exporter, grows 200,000 tonnes of cane, has a 13.3 per cent economic interest in Sugar Terminals Ltd and can produce 550,000 tonnes of raw sugar.

Mr Jackson highlighted the two dominant trends in the Australian sugar industry: local consolidation of milling assets and strong foreign interest in local mills.

MSF recently bought Bundaberg Sugar's north Queensland operations, which included four sugar mills, one of which it later closed.

Further south, Tully Sugar's mill is the subject of a bidding war, with Chinese government-owned Cofco, giant agribusiness Bunge and the foreign-backed local company Mackay Sugar vying for ownership.

Mr Barry said MSF was not looking to buy other mills in the near future, preferring to focus on its existing assets.

The company yesterday entered a new era in its history, with shareholders voting to change its name from The Maryborough Sugar Factory Ltd to MSF Sugar Ltd.

The move away from its original moniker, which it has held since it listed on the stock exchange in 1956, represents the shifting of the company's head office from Maryborough to Cairns.

The acquisition of the Bundaberg mills means much of the company's business is now in north Queensland.

MSF shares fell 6c to $4.

Source: http://www.theaustralian.com.au/business/sugar-group-profits-hit-by-big-wet/story-e6frg8zx-1226059920596