Australian grains marketer and rural services provider AWB expects to report a net loss of AUS$120-156 million (€70.5-91.6m) for its 2009 fiscal year, dragged back by its loss-making Brazil operations.
AWB said it would make an AUS$80-95 million (€47-55m) provision against its Brazil operations, which are being wound down.
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.
The company also revised the previously forecast annual operating loss for AWB Brazil to between AUS$50-60 million (€29-35m), a slight improvement upon the previous forecast loss of $55-65 million (€32-38m).
AWB had said in July that its continuing operations were expected to deliver a profit before tax and significant items of AUS$90-100 million (€53-59m) in fiscal 2009.
The continuing businesses include Australian Commodity Management, AWB Geneva, Landmark Rural Services (excluding Hi-Fert), Landmark Financial Services and Corporate.
Fertilisers in debt
Profit from continuing businesses would be negatively affected by significant items of AUS$31-33 million, and an operating loss of AUS$15-17 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.
AWB had said at the release of its full year results in November last year 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% of arable land outside of the Amazon Basin producing crops.