• Revenue: $912 million for the first half of FY 2025.
• EBITDA: $67.9 million, a 7.3% increase compared to the prior period.
• Net Profit After Tax: $31.9 million for the first half of FY 2025.
• Interim Dividend: $0.15 per B class share, fully franked.
• Total Shareholder Return: 48.2% for the first half of FY 2025.
• Net Debt: Reduced to $202.1 million.
• Leverage Ratio: Reduced to 1.4 times.
• Gearing Ratio: Reduced to 25%.
• Return on Capital Employed: Increased to 13.5%.
• Australian Rice Pool Revenue: $183 million, a 6% decrease.
• International Segment Revenue: $418.8 million, slightly below the prior period.
• Rice Food Segment Revenue: $65.5 million, an 11% increase.
• Riviana Foods Revenue: $117.3 million, a 5% increase.
• CopRice Revenue: $126 million, a 3% decline.

• Warning! GuruFocus has detected 7 Warning Sign with ASX:SGLLV.

Release Date: December 19, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ricegrowers Ltd (ASX:SGLLV) reported a solid financial performance for the first half of FY 2025, with consolidated revenue of $912 million, EBITDA of $67.9 million, and net profit after tax of $31.9 million.
• The company completed strategic acquisitions of SavourLife and Simply Delish, enhancing its CopRice and Riviana Foods segments.
• A fully franked interim dividend of $0.15 per B class share was declared, and the company qualified for inclusion in the S&P/ASX Agribusiness Index.
• The Rice Food segment saw a significant increase in profitability, with EBITDA up 69% and net profit before tax up 105% compared to the prior period.
• The company's leverage and gearing ratios improved, with net debt reduced to $202.1 million, providing balance sheet flexibility for future investments.

Negative Points

• Revenue for the first half of FY 2025 declined by 0.7% compared to the previous year, primarily due to pricing pressure in global tender markets.
• The Australian Rice Pool business faced challenges with a 6% revenue downturn, impacted by lower global tender pricing and geopolitical issues in key markets like the Middle East.
• The International Rice segment experienced a decrease in EBITDA by 5% and net profit before tax down 6% due to high costs of internationally-sourced rice and pricing pressures.
• The Corporate segment's EBITDA decreased by nearly $3 million from the prior period, affected by lower asset finance charges and property sales recorded in the previous year.
• The company faced challenges in the equine and ruminant markets, with declines in the leisure segment due to cost-of-living pressures and natural feed availability.

Q & A Highlights

Q: Can you provide more detail on the drivers behind CopRice's margin improvement and the performance of the Pryde's business? A: Paul Serra, CEO: The increased profitability in CopRice is mainly due to focusing on profitable growth in the ruminant business and the growth of the companion animal business, which includes branded and contract manufacturing. The Pryde's business is performing well, although the equine market has been impacted by cost-of-living pressures, particularly among recreational horse owners. Dimitri Courtelis, CFO, added that the racing segment is still performing well, and the strategy is to shift towards more branded products, as seen with the SavourLife acquisition.

Q: What are the manufacturing efficiencies in the Rice Food segment, and what are the plans for export growth? A: Paul Serra, CEO: The Rice Food segment focuses on innovation, business mix, and operational efficiencies to drive margin growth. New product launches and increased capacity utilization, such as rice flour exports to Japan, have contributed positively. The segment is also leveraging grain innovation to drive growth and margin improvements.

Q: Has there been an increased focus on logistics and manufacturing efficiencies, and are there more efficiencies to extract? A: Paul Serra, CEO: The focus on efficiencies is ongoing, driven by growth in scale and complexity. There are always opportunities for operational efficiencies, and the team remains focused on this. Dimitri Courtelis, CFO, mentioned specific focus areas like logistics, warehousing, and procurement, which have been key in cost control.

Q: What impact does the Indian rice export ban being lifted have on SunRice? A: Paul Serra, CEO: The lifting of the non-Basmati rice export ban from India has led to a decrease in long grain pricing, which is expected to continue. This is a net positive for the International Rice segment, although it may increase competition as the product becomes more available.

Q: With the balance sheet in good shape, are there plans for more acquisitions or capital management initiatives? A: Dimitri Courtelis, CFO: Both acquisitions and capital management are core focuses. The company is prepared to pursue opportunities as they arise, as seen with the SavourLife acquisition. The strategy includes both organic and inorganic growth, supported by a strong balance sheet.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.