CANBERRA (Dow Jones)--Agribusiness AWB Ltd. (AWB.AU) Wednesday downgraded its guidance for full year profit before tax and one-time items to A$85 million-A$110 million from previous guidance of A$115 million-A$140 million, citing a tougher grain marketing environment.
Profit on this measure last fiscal year ended Sept. 30, 2009 from continuing businesses was A$93.0 million. AWB now expects to report a first half profit for the period ended March 31 of A$25 million-A$35 million.
"With the exception of its Australian grain marketing business, all key operating businesses were trading broadly in line with expectations," on the back of improved seasonal conditions in Australia and strong support from international customers, Managing Director Gordon Davis, said in a statement.
Increases in global wheat stocks, lower transactional margins and reduced price volatility within the Australian and international grain markets have impacted the profitability of the grain marketing business, he said.
The domestic grain marketing result will be weighted toward the fiscal second half but for the full year "it is still likely to be significantly lower than the prior comparative period," Davis added.
The domestic pooling and logistic businesses should provide a stronger result than the prior year despite an increase in grain warehoused or stored on farm. Moreover, the logistics businesses, in particular rail and Melbourne Port Terminal, have benefited from an increase in volumes resulting from the improved crop size on the east coast of Australia compared to the prior year.
AWB's Geneva trading office is performing well, and after a subdued fiscal first quarter the Landmark rural merchandise and services unit is experiencing a significant increase in the level of activity, particularly in fertilizer and merchandise, due to improved seasonal conditions, Davis said.
One-time items for the fiscal first half are forecast to be principally represented by two matters previously disclosed, namely the Watson class action settlement, though this is still subject to Federal Court approval, and a loss on the sale of the Landmark Financial Services loan and deposit books.
At 2355 GMT, AWB shares were down 12 cents, or 11.4%, at 93.5 cents.
AWB Price at posting:
93.5¢ Sentiment: LT Buy Disclosure: Held
