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News 180 views last update:6 Aug 2012

Drought hit grain firm invests in NZ

Australian agribusiness group ABB Grain plans to extend its operations to New Zealand. The group has been hard hit by severe drought conditions across Australia resulting in an 89% drop in annual earnings.

The Adelaide-based company said it would now look to extend to New Zealand and grow in Europe, as well as seek possible acquisitions.

It plans to partner with New Zealand-based Mainland Poultry's PCL Feeds Division, to build an A$30m (€ 17.68m) feed mill in south Auckland. ABB will be the majority partner with a 75% stake.

The new South Auckland mill would have an annual capacity of 150,000 tonnes and be operational by mid-2009.

Storage facility
With an eye to the booming dairy sector, ABB plans to spend A$10 million (€ 5.9m) on storage facilities near Mount Maunganui and New Plymouth's ports, to service the Waikato and Taranaki dairy areas.

ABB's managing director Michael Iwaniw said the feed mill and storage would enable ABB to increase its range of grains and meals and its manufacturing capacity of processed animal feed products.

Growing demand for animal feed, particularly on the back of the global growth in dairy products, was a driver.

New Zealand produced 1 million tonnes of compound feed annually and that was forecast to grow strongly in the next decade, Iwaniw said.

The company hopes to have storage and bulk handling near Auckland's port by the end of the year.

Profit down
In Melbourne this week, ABB Grain said its net profit for the year to September was A$7.3 million (€ 4.3m), down from A$59.4 million (€ 35m) in the prior year.

"There's no doubt the drought, and the volatile market activity that followed, has had a significant influence on our net profit," Iwaniw said.

ABB currently employs more than 850 full time staff across Australia and New Zealand and has a turnover of more than $1.5 billion (€ 884.7m)a year.

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