chart, page-3

Careful robbb ... this one is riddled with unsavoury sorts.

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AWB expects to report net loss of up to $156m
August 24, 2009 03:35pm

GRAINS marketer and rural services provider AWB expects to report a net loss of $120 million to $156 million for its 2009 fiscal year, dragged back by its loss-making Brazil operations.

AWB said it would make an $80 million to $95 million provision against its Brazil operations, which are being wound down.

The company also revised the previously forecast annual operating loss for AWB Brazil to between $50 million and $60 million, a slight improvement upon the previous forecast loss of $55 million to $65 million.

AWB had said in July that its continuing operations were expected to deliver a profit before tax and significant items of $90 million to $100 million in fiscal 2009.

The continuing businesses include Australian Commodity Management, AWB Geneva, Landmark Rural Services (excluding Hi-Fert), Landmark Financial Services and Corporate.

However, AWB said today that the profit from continuing businesses would be negatively affected by significant items of $31 million to $33 million, and an operating loss of $15 to $17 million from Hi-Fert (its 50/50 fertiliser joint-venture with agribusiness Elders).

Profit would also be dragged back by the AWB Brazil operating loss of $50 million to $60 million, the AWB wind-down provision of $80 million to $95 million, group income tax expense of $12 million, and AWB Brazil tax expense of $29 million.

The income tax expense for AWB Brazil comprises a $14 million benefit from recognition of current year deferred tax assets, and a $43 million write-off of deferred tax assets relating to tax losses currently on the balance sheet.

AWB said in July it would be undertaking an orderly wind-down of the Brazil operations, which might result in one-off losses and costs.

The provision of $80 million to $95 million largely relates to the impairment of debtors and investments and the recognition of contingent liabilities.

"Included in the provision is management's expectation that an estimated net cash contribution will be required following the completion of the winding down, in the range of $16 million to $35 million," AWB said.

As part of the winding-down process, AWB is considering a possible sale of AWB Brazil as a going concern and has received some initial expressions of interest.

One of the factors behind the poor result in Brazil was increased provisioning for doubtful debts due to Brazil's deteriorating credit environment.

Performance also was affected by lower trading margins, foreign exchange losses, interest and overhead costs, and poor commercial decisions made locally.

AWB Brazil was established in 2006, with operations in grain production; soybean, corn, oilseed and meal origination; storage, warehousing and marketing; and cattle feed lots.

AWB had said at the release of its full year results in November 2008 that Brazil was one of the few nations in the world that had capacity to significantly expand output to support the growing global demand for food, with only 20 per cent of arable land outside of the Amazon Basin producing crops.

AWB shares were 5 cents higher at $1.4 at 2.29pm (AEST).

http://www.news.com.au/heraldsun/story/0,21985,25973584-5005961,00.html