Ricegrowers H1 Earnings Call Highlights

Ricegrowers (ASX:SGLLV) executives highlighted improved profitability and progress on the company’s 2030 Growth Strategy during an investor webcast covering its FY2026 half-year results. Group CEO and Managing Director Paul Serra and Group CFO Dimitri Courtelis said the business strengthened margins despite a “challenging operating environment,” with growth in selected strategic markets offset by declines in lower-margin, price-sensitive regions and reduced tender volumes.

Profitability improved despite a softer top line

Management reported net profit after tax of AUD 36.6 million and EBITDA of AUD 71.3 million, up 14% and 5%, respectively, versus the prior corresponding period. Group revenue was AUD 884 million, down 3% on 1H FY2025.

Serra said strategic growth areas—including the Middle East, the U.S., and the Toscano and SavourLife brands in Australia—added about AUD 25 million of revenue versus the prior period. Those gains were more than offset by roughly AUD 50 million of combined sales declines, driven by pressure in Pacific markets and a pullback in “lower priority tender volumes” as the company focuses on higher-value branded growth.

The company declared a fully franked interim dividend of AUD 0.20 per B Class Share. Diluted EPS was AUD 0.533 per B Class Share, up 14%. Serra also noted a total shareholder return of 63.3% compared with 11.4% for the ASX 300 Accumulation Index over the referenced period and confirmed SunRice was included in the ASX 300 Index in the first half of FY2026.

Serra pointed to margin expansion over the last two years, with EBITDA margin rising from 6.9% to 8.1%, attributing the improvement to a shift toward higher-value branded products and disciplined cost control.

New operating model and reporting segments

Serra said the group transitioned in May 2025 to a new market-based divisional structure intended to leverage scale in Australia and New Zealand while “deepening” international expertise. As a result, the company updated its reportable segments to:

• Consumer Packaged Goods (CPG) International
• CPG Australia & New Zealand (ANZ)
• Bulk Rice & Animal Feed

Segment performance: International and ANZ CPG face pressure, bulk and feed improve

CPG International posted revenue of AUD 355 million (down 7%) and EBITDA of AUD 37 million (down 12%), with an EBITDA margin of 10.3%. Courtelis cited several drivers, including Middle East investment (including a premium SunRice basmati range and new distributors), category share gains in the U.S. (including expanded distribution of Hinode microwave cups and core rice across the West Coast and Hawaii), lower U.S. rice costs, and freight and supply-chain efficiencies.

He also described headwinds, including disruption in Papua New Guinea (PNG) volumes tied to GST legislative changes early in the half, intensified competition and discounting in Pacific markets, foreign exchange pressure (including PGK depreciation against the U.S. dollar), and upfront costs linked to executing the 2030 Growth Strategy (including higher advertising and promotion spending and an expanded Middle East team).

CPG ANZ delivered revenue of AUD 375 million, broadly in line with the prior year, and EBITDA of AUD 32 million, slightly lower year over year, with an EBITDA margin of 8.6%. Courtelis said growth in bakery led by Toscano benefited from range expansion (Italian flatbreads, brioche burger buns, and desserts) and marketing support. He also noted SavourLife contributed its first full six months since its August 2024 acquisition.

Challenges in ANZ included heightened competition and consumer shifts toward lower-priced offerings in categories such as rice, microwave rice, and condiments, as well as early indications of a slowdown in the broader pet sector. Courtelis also cited temporary supply constraints linked to commissioning new packaging equipment at Leeton, operational challenges at an equine feed plant that have since been addressed, and foreign exchange pressure from a weak Australian dollar increasing imported production costs (with pricing actions expected to benefit later in FY2026).

Bulk Rice & Animal Feed revenue was AUD 153 million (down 1%), while EBITDA improved to AUD 8 million, for an EBITDA margin of 5.5%. Courtelis attributed the improved profitability to growth in animal feed (new customers and increased demand for supplementary feed across ANZ), a progressive recovery in global rice tender prices, and a sourcing advantage from lower U.S. rice costs and a more favorable sourcing mix. He said these gains were achieved despite reduced global tender volumes, partly due to timing and lower Australian crop mill-out rates limiting planned trading, and also reflecting a greater focus on higher-margin branded activity.

Capital management, free cash flow, and acquisition capacity

Courtelis said the company published its capital management framework for the first time, aiming to guide financial stewardship while targeting “strong and consistent” dividends and prudent debt management. He noted monetization of non-core assets delivered about AUD 1.5 million in incremental profit in the half and said the group maintained a pipeline of strategic M&A opportunities.

In Q&A, management said the group’s stated 2x–3x debt-to-EBITDA target ratio supports the ability to pursue acquisitions that fit the strategy. Courtelis added that with “core debt now essentially at zero,” leverage is based on seasonal facilities and stood at 1.1x, which he said provides capacity to fund acquisitions.

On cash flow and taxes, Courtelis said free cash flow is expected to increase in the second half, citing reaffirmed guidance, similar capex levels to the prior year, and an expected reduction in net working capital as inventory positions decline. He also said FY2026 tax is “a bit of a one-off” at around 22%–23% due to permanent deductions associated with the exercising of some B Class shares, with expectations to return to more normalized levels (citing last year’s high-20% range).

Outlook: growth reaffirmed; paddy price range narrowed

Serra reaffirmed the group’s outlook for FY2026, stating it expects growth in both the top and bottom line for the full year. Tailwinds cited included brand strengthening and innovation pipelines in both CPG segments, targeted expansion into new categories and markets (particularly the Middle East), recovery in global tender pricing and lower sourcing costs, growth in animal feed, continued recovery from PNG’s GST-related disruption, and continued cost and operational efficiency efforts.

He also flagged ongoing risks, including competition in Pacific markets and select ANZ categories, foreign exchange weakness (AUD, and currencies in PNG and Kenya), inflationary pressures, and the need to preserve Australian paddy for premium markets amid an upcoming dry season. Serra added there remains “heightened uncertainty” in global trade driven by U.S. policies and broader global instability, including conflicts in Europe and the Middle East.

Regarding growers, Serra said the Riverina crop at around 511,000 tonnes supports a “very full milling program” and premium branded sales in FY2026, while tender pricing recovery, freight efficiencies, and a well-hedged USD position benefit CY25 paddy returns. However, he emphasized that persistently low whole grain mill-out rates remain a “significant issue” and, along with paddy preservation needs, will likely moderate revenue growth. The company updated its estimated CY25 paddy price range for Riverina medium grain rice to AUD 385–AUD 420 per paddy tonne, narrowing from AUD 380–AUD 450.

Looking ahead, Serra said FY2027 plantings are “substantially lower than average” due to dry conditions and ongoing water reform, but the group expects to enter FY2027 with carryover inventory and continues to diversify sourcing globally, now sourcing the majority of its rice outside Australia under a multi-source, multi-market model.

About Ricegrowers (ASX:SGLLV)

Ricegrowers Limited operates as a rice food company in Australia and internationally. It operates through Rice Pool, International Rice, Rice Food, Riviana Foods, and CopRice segments. The company engages in the receipt and storage of paddy rice; and milling, manufacturing, processing, procurement, distribution, and marketing of rice and related products, as well as other grocery products, gourmet, and special occasions food products, and research and development into the growing of rice. It offers everyday, microwave, and healthy rice; rice snacks; bulk bag rice; and rice for restaurants.