Agribusiness ABB Grain has downgraded its 2009 full year earnings guidance by up to 32 per cent due to difficult market conditions.
ABB said this morning its guidance for 2009 full year net profit after tax was now between $43 million and $53 million, down from a range of $53 million and $63 million issued in May.
Its shares dropped 35 cents, or 3.7 per cent, to $9.00.
The revised guidance also forecasts underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $125 million and $145 million.
Included in the guidance are one-off expenses of approximately $8 million after tax, representing due diligence and transaction related costs.
ABB managing director Michael Iwaniw said the downgrade was a result of weaker demand for Asian malt and the impact of drought in Australia.
"We've experienced slower malt deliveries against contracts in the Asian region due to the global financial crisis resulting in lower growth in beer consumption,'' Mr Iwaniw said.
"Despite this, we still expect to generate malt earnings equivalent to last year's record and anticipate the growth slowdown to be short-term in nature as longer term beer consumption projections remain strong.
"In addition, the recent past droughts have dampened rural input sales, including fertiliser, agricultural chemicals and merchandise.
"Growers have shown a reluctance to commit to these purchases in advance of greater certainty around cropping conditions.''
ABB's core businesses are grain marketing, malt, and rural services such as fertiliser and chemical supplies.
Mr Iwaniw said ABB's revised guidance is equivalent to its 2008 earnings, which would be a solid base to build on given recent good rains in grain growing regions.
Meanwhile, ABB said its proposed $1.6 billion tie-up with Canadian agribusiness Viterra Inc remains on track, with a scheme booklet expected to be released in late July or early August, and a shareholder vote held in early September.
ABB received a takeover approach from Viterra in April, and in May the two parties signed an implementation agreement under which Viterra would acquire ABB in a cash-and-scrip deal.
The Foreign Investment Review Board delivered its approval of the transaction late last month.
AAP
