United Malt (ASX:UMG) earnings fall on FY21 results

Company News

by Lauren Evans

United Malt (ASX:UMG) reported a fall in earnings for the year ending September 30 primarily due to the impact of Covid-19 restrictions, as well as a grain shortfall in North America. 

United Malt serves brewers, distillers, and other users of malt and craft ingredients all around the world. The company’s revenue fell 4 per cent from the prior year to $1.2 billion, while earnings before interest, taxes, depreciation and amortisation fell 21 per cent to $123.3 million.

United reported a final dividend of 3.5 cents per share unfranked, bringing the full year dividend to 5.5 cents per share with payments scheduled for December 17.

The company said their FY21 results were impacted by Covid-19, including extended lockdowns “which reduced on-premise consumption of beer and disruption to supply chains in key markets”.

“Stringent Covid-19 restrictions, including strict stay at home orders and curfews, reduced volume supplied from Australian and Canadian operations to Asian customers in the second half,” the company said

“High vaccination rates in North America and the UK amidst the northern hemisphere summer weather supported increased activity in the second half of the year compared to the prior corresponding half,“ the company explained. 

Statutory net profit after tax reached $13.8 million for the year, compared to $45.6 million in the prior year. Earnings per share were 4.6 cents, compared to 16.8 cents in the prior year.

“Covid-19 lockdown restrictions affected both volume and mix across our markets during the year, as did the higher Australian dollar, freight disruptions and one-off costs reflected in our financial results," said CEO Mark Palmquist. 

United Malt said it will have to import barley from Australia and Denmark to its North American operations to cover a grain shortfall caused by drought. 

“Barley crop conditions in North America have deteriorated due to drought conditions which have reduced the Canadian barley crop and have also increased barley prices globally."

“In response, we are supplementing local supply with imported malting barley from Denmark and Australia via bulk vessel. We anticipate a cost impact of $8-12 million in FY22 for additional supply chain costs from importing barley." 

“We expect volumes to approach FY19 levels post 1QFY22, with continued improvement in product mix. We remain focused on leveraging the improving market conditions whilst managing short term volatility in freight, barley crop and energy costs."

Shares in United Malt Group (ASX:UMG) are trading 1.6 per cent lower at $4.06.

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