AFTER posting better than anticipated half year results in the wake of a tough period due to the COVID-19 pandemic United Malt is hopeful growing normality in North America, a major area for the company's revenue, will see sales go up.
Earnings before interest, tax, depreciation and amortisation (EBITDA) was $52.7 million, up slightly from guidance at the company's annual general meeting in February of $47-50 million.
While this some good news for the fledgling company, formed in March last year following the demerger of GrainCorp's agribusiness and malt divisions, it has still been a tough year.
EBITDA is down 32 per cent with the company taking a hit as beer consumption plummeted, especially in the draught beer segment, due to lockdowns across the globe.
However United Malt chief executive Mark Palmquist said there was light at the end of the tunnel.
"We're seeing things open up in North America, which is 60pc of our business, so that is important for us," Mr Palmquist said.
"We're hoping to see trends go back to where they were pre-COVID."
He said he expected the craft beer segment, which is lucrative for maltsters with its requirement of higher malt products, would continue to grow, albeit not at the levels seen in the 2010s.
"We were seeing double digit growth in craft brewing for years, that is back to a more sustainable 2-3 per cent now."
The company is also finding diversified earning streams in products ranging from whisky to non-alcoholic beer.
"Whisky is a big one, in particular in Scotland as you would imagine," Mr Palmquist said.
"Whisky makers have different requirements to the beer market, they want lower protein, higher enzyme product."
He said the growing movement towards zero alcohol beer for health and safety reasons was a positive for his company.
"Zero alcohol is really good for us, they require a malty product to get as much flavour in the product as possible.
"We see the trend to diversify and to get more people to drink a beer product even when they have to drive or they're concerned about the health impacts of too much alcohol is fantastic for everyone and we're right on board."
Mr Palmquist said recently announced tax breaks in Australia for distillers and craft brewers were a positive move.
"We think that is a really good step and hopefully it can help businesses that have done it tough during COVID-19 lockdowns stay afloat."
Globally, it has been a tough time for those involved in the alcohol industry.
A Rabobank report said some countries, such as South Africa, restricted alcohol consumption during the pandemic, while in other big markets, such as Mexico, brewing was classed as a non-essential activity and stopped.
However, the report found North America, where United Malt has a strong presence, held up well, with its focus on off-trade sales and e-commerce.
Mr Palmquist said United Malt figures had found volume from March onwards this year had been around 95pc of pre-COVID 19 levels.
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
