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Highlights
United Malt expects EBITDA (before SaaS costs) for the first half to be nearly AU$57 million.
The company also said that its dividend policy remains to disburse nearly 60% of underlying NPAT as dividends.
Higher input costs are expected to result in a net EBITDA impact of nearly AU$4 million in FY22.
United Malt Group Ltd (ASX:UMG) on Tuesday issued guidance for expected earnings for the half-year ending 31 March 2022 and also for the year ending 30 September 2022.
United Malt expects underlying earnings before interest, tax, depreciation and ammortisation (EBITDA) (before SaaS costs) for the first half to be nearly AU$57 million. The company expects FY22 underlying EBITDA (before SaaS costs) to be in the range of AU$115 million to AU$140 million.
The company’s guidance for FY22 included costs in the range of AU$20 million to AU$25 million, arising out of severe drought conditions in Canada. Of the total amount, AU$8 million has been incurred in the first half, United Malt said in its latest ASX update.
Meanwhile, the stock was trading down 4.49% at AU$4.04 at 10:20 AM (AEST). The stock is down over 10% on a year-to-date (YTD) basis.
The company also said that its dividend policy remained the same i.e. to pay nearly 60% of underlying net profit after tax (NPAT) as dividends.
United Malt is the fourth-largest commercial maltster globally, and also operates an international distribution business, which provides a full-service offering for craft brewers and distillers, including malt, hops, yeast, adjuncts and related products.
Supply chain disruption’s impact
United Malt said that shipments to some customers were delayed on account of supply chain disruptions in the sea, rail and road freight in the first half. In addition, higher input costs are expected to result in a net EBITDA impact of nearly AU$4 million in FY22.
“These recent cost escalations will be largely passed through to customers over the course of the next 9 months, reducing the impact into FY23,” the company said.
Outlook beyond FY22
Commenting on the development, United Malt’s CEO and Managing Director, Mark Palmquist, said that the company was confident in the business outlook. “At the AGM in February, we outlined a number of external challenges facing the Processing segment this year, including Canadian barley crop conditions, supply chain disruptions and cost inflation,” he said.
“We have seen a further impact of these external factors since February, particularly the deterioration in the quality of the Canadian barley crop. We are addressing this issue for our customers through our ability to source barley by leveraging our international operations in key barley growing regions,” he noted.
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