THE CBH Group has recorded a stunning $184 million turnaround on the back of the record 2011-12 harvest.
Releasing its annual report last week, CBH CEO Dr Andy Crane said the company posted a record net profit after tax of $162.4 million for the year to September 30, 2012 - a marked increased on the previous report's $21.4m loss.
"The record 15 million tonne harvest of 2011-12 was the main contributor to the significant profit achieved this year," Dr Crane said.
"Our marketing and trading division also achieved a stronger result this year, benefitting from higher commodity prices resulting from supply shortages in a number of key grain-growing regions throughout the globe, including the US and Russia.
"The high commodity prices experienced throughout the last quarter of 2012 created very challenging conditions for our flour mills in South East Asia but despite this, they delivered another strong financial performance, achieving a profit after tax of $7m, attributable to the CBH Group, which was used to meet debt obligations of about $US3m and for general operational purposes."
Dr Crane said the value of CBH's investment was now estimated to have grown substantially since its acquisition, based on recent valuations of the Interflour Group.
"This growth, plus cash returns of around $US25m since we acquired the investment in 2005, equates to an average 30 per cent return a year in US dollars and 24pc a year in Australian dollars," he said.
"This is a very strong performance and our aim over time is to make sure members feel more closely connected to the value which is being created for growers from this investment.
"The most important thing to remember about the significant profit is that it will all be returned one way or another to growers.
"We have demonstrated this already in the decision to keep storage and handling charges flat for the 2012-13 season, despite anticipated labour cost increases of 4-6 per cent and inflation on other expenses of around 4pc.
"The board has also committed to invest an additional $40m over the next three years on network upgrades, on top of the regular annual commitment of around $85m.
"This additional funding will be particularly targeted at speeding up turnaround times at sites, one of the most important ways you have told us we can return value to you.
"Looking ahead, 2013 will be another challenging year for your co-operative.
"While we have a disappointingly smaller harvest to manage, there is still the task of outturning a large volume of both new and old season's grain to port for export.
"The potential benefits of our new rail strategy are huge but so is the challenge of the transition to our new operator and rail fleet."
Dr Crane said by 2020, CBH needed to be ready to handle potential deliveries of up to 20mt on a regular basis.
"We are always balancing the cost benefit analysis of whether emergency storage to handle certain peaks is more cost effective than building long-term storage," he said.
"Often areas of overproduction and underproduction move around the State and we handled a record crop this year using emergency storage where it made sense.
"We will continue to manage our storage capacity to sensibly balance the service you need with keeping your storage and handling charges as competitive as possible.
"Our ports are very efficient and they can out-load large crops very capably.
"Our biggest challenge continues to be feeding those ports and the rail investment is pivotal to doing this faster and more reliably."
Dr Crane said the company was committed to Grain Express, CBH's co-ordinated logistics system.
"Grain Express will continue regardless of whether it keeps an exclusive dealing authorisation," Dr Crane said.
"We strongly believe it can deliver more value to growers and the industry as a complete bundled system but we fully expect it to remain the most efficient and effective system for getting grain to port, even if other transport options are available.
"There is no doubt in my mind that CBH is investing many times what other bulk handlers or marketers would, in maintaining and upgrading infrastructure in WA.
"We will continue to explore and implement new initiatives to create and capture value along the supply chain and return that to you through your co-operative."
CBH chairman Neil Wandel said the result reinforced his belief that co-operatives could be just as successful as corporate entities.
"In our sector, co-operatives can do better, provided they adapt to their changing environment and the changing needs of their members," Mr Wandel said. "In the aftermath of the Global Financial Crisis, it is clear that many corporations are now learning from the co-operative model by taking longer term views and aligning their values and actions with social good.
"Throughout the last 12 months, I have had the opportunity to meet with many other representatives from co-operatives throughout the world and one of the main things I have taken away from this experience is greater confidence in our co-operative model being able to continue to grow and deliver value back to our growers."