March 18, 2009
AWB faces challenges; focus on costs; to open Kiev office
Australia''s AWB Ltd. faces a challenging operating environment, and while its focus is to reduce costs and debt, the agribusiness still plans to expand its overseas network and open an office at Kiev in mid 2009, Managing Director Gordon Davis said Wednesday (March 17).
Major challenges include drought in Southeast Australia, credit market constraints and a global economic slowdown, he said in a presentation at an agribusiness conference, also issued electronically.
Meeting these challenges includes setting clear targets to reduce overheads and costs, tighter management of working capital, inventory margins and improved credit oversight, he said.
AWB plans to reduce net debt by at least A$200 million this fiscal year ending Sep. 30, including a 20 percent reduction or at least A$60 million cut in working capital for its Landmark rural merchandise and services network, and cutting working capital needs from its commodities management operations, he said.
Despite this, the company still plans to expand its international network and shift the base of barley, wheat, corn and oilseeds trading operations in the Black Sea to Kiev from its Geneva office, he said.
The Black Sea operation is targeting business this fiscal year of 350,000 tonnes and has already executed more than 200,000 tonnes, he said.
The Kiev office will expand AWB''s trading footprint overseas, building on operations in Geneva, where it has 30 staff, Brazil, and India, where it has identified opportunities arising from shortfalls in warehousing and logistics capacities, he said.
AWB continues to develop strategies to better use the more than 400 "touch points" or Landmark outlets as leverage for its commodities and financial services businesses, he said.
Davis didn''t provide any profit guidance for this fiscal year in the presentation.
