Australia's AWB Posts 53 Pct Profit Drop

Net profit fell to $27.1 million Australian dollars ($24.1 million) from $58.1 million Australian dollars a year ago. Sales declined 3.6 percent to $4.33 billion Australian dollars ($3.85 billion).

Still, AWB Managing Director Gordon Davis said all of the company's divisions were profitable in the last fiscal year despite company restructuring, the drought, and the loss of the company's wheat export monopoly. The company lost that status due to a government inquiry's findings of curruption in the company's previous trade with former Iraqi leader Saddam Hussein's regime.

The outlook for Australian agribusiness is positive due to international growth in the biofuels industry, a global shortage of farm commodities and record prices, Davis said.

Despite hardships at home, the result for last fiscal year was built in part on strong profit growth from AWB's overseas trading operations and reflects the steady diversification of earnings away from a total dependency in 2001 on wheat exports.

"Approximately 40 percent of our business earnings is generated offshore and therefore not affected by drought in Australia and only 10 percent of earnings are directly related to Australian bulk wheat exports," Davis said in a statement.

Davis said a range of uncertainties exists about the business in the coming year, principally seasonal conditions that will have a large influence, particularly on Australian operations, he said.

"We aren't making any forecasts for earnings for '08," he told reporters, citing a range of variables, including uncertainty about future export wheat marketing arrangements.

The Australian government has promised to reform the Australian wheat market after an inquiry last year concluded that AWB paid $220 million in kickbacks to the former Iraqi regime between 1999-2003 to secure lucrative wheat contracts under the discredited U.N. oil-for-food scheme.

AWB, formerly the government-owned Australian Wheat Board, has lost its monopoly over Australian wheat exports due to the Iraq scandal but still controls a majority of exports.