Thank you for standing by, and welcome to the SunRice Group FY 2022 Annual Financial Results Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question- and- answer session. At that time, if you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand over to the conference call host, SunRice CEO, Mr. Rob Gordon, and the company's CFO, Mr. Dimitri Courtelis. Please go ahead.
Thank you, and welcome everyone to this morning's call. We appreciate you taking the time to join us following the release of our full year results for the financial year 2022 yesterday. My name's Rob Gordon. I'm the CEO of the SunRice Group, and I'm joined in Sydney by our CFO, Dimitri Courtelis. Plan for today's call is to provide an overview of our full- year 2022 financial results, then open for questions to all participants who are dialed in today. Along with yesterday's announcement, we've launched an investor presentation on the ASX, which I'm sure you have in front of you. I'll start today with some high-level commentary and a snapshot of the results before handing over to Dimitri to step through the detailed performance of each of our segments.
Financial year 2022 saw strong performance with revenue, naturally determined paddy price, and dividend all at the highest levels in the group's history. Net profit after tax more than doubled compared with the prior year. The business has delivered an outstanding result, which followed two years of near record low Australian rice production, a period in which the company diverted resources to maintaining supply of key markets with rice from other origins, while still progressing investments in new acquisitions and other organic growth initiatives. This improved performance was the consequence of the return of Australian rice to key markets, thanks to a rebound in production. The accretive contribution of recent acquisitions and the group's multi-origin, multi-price point International Rice supply capability.
The strong performance was delivered despite the ongoing disruption to global supply chains and uncertainty caused by the COVID-19 pandemic and, of course, the impacts of the Ukraine conflict as financial year 2022 closed, which has led to inflationary impacts on key business inputs. Let me now go into more of the details. Group revenue was AUD 1.3 billion for the year, up some 30% on the prior period. Earnings before interest, tax, depreciation, and amortization was AUD 91.3 million, up 86% on the prior year. Net profit after tax was AUD 48.7 million, up 167%. Earnings per B Class Share was AUD 0.772, up 123% on the prior corresponding period.
A naturally determined pool paddy price of AUD 428 per ton for our popular medium grain variety was also delivered while fixed price contracts of AUD 475 per ton was paid for medium grain, as well as higher prices for specialty varieties. As mentioned, this was the highest naturally determined paddy price in the group's history. The improved performance allowed the group to distribute total dividends of AUD 0.40 per B Class Share for the year, also a record, and includes a special dividend of AUD 0.05 per share. There were a range of key contributors to the strong financial results, including the return of Australian rice and performance of some of our profit businesses, as well as realization of benefits from the ongoing execution of our growth strategy. Dimitri will step through our segment performance shortly.
However, overall, the improved performance across the group was delivered in the face of significant headwinds and uncertainty. COVID-19 remained at the forefront and has been an uneven recovery across our markets, particularly in the food service sector. We continue to face unprecedented and escalating increases in freight and other manufacturing input costs, which were worsened by the Ukraine conflict and are continuing into the current year. The disruption to shipping also led to situations where demand was, at times, unable to be fulfilled in some markets throughout the year. Despite all of these headwinds, our people continued to demonstrate extraordinary resilience two years into an extremely challenging period to deliver this outstanding result. Execution of our growth strategy has remained at the forefront of our minds.
No sooner had we set the growth strategy some five years ago than the core Australian rice business went into the second and third worst droughts on record. We leveraged our International Rice supply capability to continue meeting demand in our approximately 50 global markets from other origins. We remained profitable and still delivered dividends consistently at record levels. We also continued investing against our growth strategy, including through acquiring value accretive businesses and a rice processing mill in Vietnam that it further bolsters our International Rice supply capability. Using our consumer insights and product innovation capability, coupled with organic growth and acquisitions, we've also been able to build a complementary portfolio of brands with a number of leading positions in 14 countries.
With Australian rice back, we've seen a bounce in performance because we had Australian rice as well as our multi-market, multi-origin rice capability and strategic investments all realizing benefits. An example of this was the Pryde's EasiFeed acquisition in our CopRice segment for AUD 38 million. Pryde's EasiFeed is a leading supplier of branded feeds for the Australian equine market and will scale CopRice while supporting its diversification into new geographic regions and increasing its presence in the high-value equine market. Looking back at our growth strategy since its adoption in financial year 2017, we've invested AUD 113 million in strategic value accretive business acquisitions, and we have pursued organic growth initiatives, investing AUD 151 million in capital expenditure. All the while, we've delivered against our key objectives to optimize returns for both classes of our shareholders.
In fact, we paid out close to AUD 1 billion in paddy price payments to our A Class shareholders and growers in the five years between 2016 and 2021, and delivered a total of AUD 121 million in dividends to our B Class shareholders for the five years to this last financial year. Our total shareholder return over that period was 150%, and this compares to the ASX 300 accumulation index of just 81%. I'll return to outlook more later, but looking ahead, we continue to assess a pipeline of strategic and organic growth opportunities against our financial investment criteria. We have built balance sheet strength and flexibility, and we remain committed to leveraging it to invest in further growth initiatives aligned with our strategy.
The success of that strategy has been demonstrated by our ability to pay consistent dividends through the cycle. As mentioned earlier, this year, we've declared a record dividend of AUD 0.40 per B Class Share, inclusive of a special dividend of AUD 0.05 per share. Prior to that, we've been able to maintain a consistent dividend of AUD 0.33 per share over the last four years, despite having faced the dual impacts of two years of Australian drought and COVID-19. This is something we're very proud of. Something else we're proud of is our commitment to sustainability. Sustainability is at the heart of our business and remains integral to how we create value for our stakeholders. We continued making significant progress during the year against our sustainability strategy, including the finalization and adoption of specific targets underneath each of our six priority areas.
They are water efficiency, climate resilience, waste reduction, resilient communities, respecting human rights, and food security and quality. We were pleased to release these targets to the market yesterday. With that, I'll hand over to Dimitri to discuss our key financial performance indicators and each of our business segments. Then I'll cover off on our outlook for financial year 2023 before taking your questions.
Thank you, Rob. Good morning to everyone on the call today. As Rob has highlighted, Group EBITDA was up 86% on the prior period to AUD 91.3 million and driven largely by the return of Riverina Rice, allowing the Rice Pool business to fully recover its overheads as well as strong performance in the key profit businesses. International Rice contributed an additional AUD 9.9 million in EBITDA, while Rice Food and Riviana Foods contributed an additional AUD 7 million and AUD 3.6 million respectively. Onto cash flow. The group continued to exercise strong financial discipline, particularly in managing the net working capital requirements as the inventories increased in line with the Riverina volumes.
Having largely depleted inventories during the drought years, financial year 2022 was a period of rebuild, and inventories increased accordingly from AUD 375 million at April 30th, 2021 to AUD 525 million at the end of the financial period this year. Despite the significant increase in inventories, we were able to generate net cash inflow from operating activities of AUD 24 million. We have built a strong balance sheet. Net debt and gearing were higher, primarily due to the rebuild of inventory that I just outlined, and also the fact that we financed the Pryde's EasiFeed acquisition through existing cash reserves and financing facilities. Our net debt to EBITDA was 2.2 x, down from 3 x last year, and remains well within our target range of 2x-3 x, and our gearing ratio ended the year at 28%.
We've also highlighted our core debt to EBITDA of 0.8 x, given the significant components of our debt that largely relates to seasonal financing of working capital. I'll now step through each of the key business segments. The first segment I'll cover off is the Australian Rice Pool business, which is aligned to our A Class shareholders and deals with the receiving, the milling, marketing, and the selling of Riverina Rice. As Rob has outlined, the Rice Pool business saw a significant improvement in performance due to the increased Riverina Rice production from 45,000 tons in CY 2020 to 417,000 tons in CY 2021. Revenue from external customers was AUD 246 million, up AUD 131 million or 114% on the prior year.
Following two years of losses, the pool was able to absorb all of its overheads and deliver a naturally determined paddy price of AUD 428 per ton for the Reiziq varietal for our CY 2021 crop. The bumper harvest also underpinned the return of larger volumes of Australian rice to premium export markets and the participation in World Trade Organization tenders, in contrast with the past two years in which these markets were primarily supplied from the International Rice segment. Volumes in the Middle East were particularly encouraging as the region embraced the return of Australian rice, the SunRice brand trading at premium prices in the Gulf States despite the market competition shifting to value brands.
Now, given these factors, we were able to deliver a record naturally determined paddy price, despite margins being affected by ongoing supply chain disruption and escalating freight costs, as well as the overhang of previous year inventory in some markets due to COVID-19 related shipping delays, particularly in the late financial year 2021. At year-end, the Rice Pool business had incurred approximately AUD 17.5 million in additional and unplanned freight costs, which impacted the final paddy price by approximately AUD 50 per ton. Domestically, COVID-19 restrictions continued to contribute to strong retail sale volumes. While new national contracts to service sushi and in-home meal kit customers were secured towards the end of the financial year, the overall food service sector remained depressed and has not yet returned to pre-COVID-19 levels.
As the year closed out, SunRice welcomed the New South Wales government's decision to renew the rice vesting arrangements for a further five-year period ending 30th of June 2027. I'll now move on to our International Rice segment, which sourced, processed, and marketed rice to over 40 international markets this year, and supplies into Australia as well, when varieties cannot be grown here or when the supply is low. Revenues in that segment increased by 13% to AUD 620.9 million, while EBITDA was AUD 43.6 million and net profit before tax AUD 34.2 million, which were both 29% and 51% higher on the prior year.
After two consecutive years of sourcing rice to maintain key markets for the Australian Rice Pool business during the drought, the switch back to Australian rice in premium markets in financial year 2022 demonstrated the complementary nature of SunRice's business model in action. Despite losing volume as Australian rice progressively returned to international markets, the International Rice segment renewed strategic sourcing contracts and used this to return to international tender markets. In the Middle East, the launch of our SunRice family rice capitalized on a new medium grain variety from Asia with encouraging early sales results. In the United States, our SunFoods business commenced a supply agreement with the Central Valley Rice Growers Association, which underpinned its transition into a more independent business.
Where previously SunFoods has largely operated as a hedge for the Australian drought, the rice volume secured allowed it to refocus on global tenders and its domestic markets in the U.S., including the reopened Hawaiian market. Increased sales and marketing efforts, coupled with recent deployment of strategic initiatives such as the development of a stabilized rice bran processing capability at the SunFoods mill in Sacramento, supported the ongoing strong performance of the business. Increasing sales volumes and margins in the key Pacific markets of ours supported improvement in profitability, due in part to the continued performance of the SolRice family range in Solomon Islands and a range of successful initiatives to grow sales and contain costs in our Trukai business in PNG. New markets were also developed in Europe, leveraging SunRice's Asian short grain supply chains.
COVID-19's significant and uneven impact on global economy as well as inflationary pressures on inputs due to the disruption of global shipping and the Ukraine conflict did put pressure on costs. However, overall, the division managed to expand its margins driven by price increases and strong cost containment in key regions. Turning now to our Rice Food business, which manufactures, markets, and distributes value-added rice products. Revenue was 11% up on the year at AUD 106 million, whilst net profit before tax of AUD 5.9 million was up from a pre-tax loss of AUD 1.9 million in the prior period. EBITDA of AUD 7.9 million, significantly up on last year. The greater availability of Australian rice used as an input in a number of the segment's products played a key role in the performance uplift of the segment.
This was, however, felt only partway through the period due to the time required to process the crop after stocks were fully depleted in late financial year 2021. Good milling yields in the Rice Pool business also led to more expensive head rice being needed for flour manufacturing, given brokens were not readily available. The segment also benefited from strong growth in the convenience category and snacking products, supporting both revenue and profitability. Internationally, our rice cracker chips continued to gain momentum in the markets of Singapore and in Hong Kong. Innovation and quality improvements resulting from the investments in new cooking technology in Leeton in financial year 2021 further underpinned both volumes and sales uplifts in microwave rice and the new premium product range of Riviana's microwave rice was launched, contributing to incremental market share gains.
Rice Food's local manufacturing capability also meant that it was not hampered by the supply challenges faced by manufacturers of competing products that were sourced offshore. However, operational challenges due to the delay in raw material inputs and packaging, as well as labor shortages, affected the manufacturing products of rice chips and resulted in supply shortages at some points during the year. Within our Riviana Foods segment, our specialty gourmet and entertainment food business, revenue of AUD 196.5 million were recorded in financial year 2022, which is some 32% up on the prior period. EBITDA and net profit before tax of AUD 14 million and AUD 12.5 million were each up 35%. The strong growth in revenue and profitability were driven by the full- year impact of the KJ & Co.
Brands business acquired in financial year 2021. KJ & Co. contributed AUD 68 million in revenue and AUD 6 million in net profit before tax, and has built scale while diversifying Riviana's presence across new categories in Australia and New Zealand, becoming earnings per share accretive and performing ahead of our sales projections. Other positive drivers of the results included Roza's Gourmet. Those products were ranged for the first time in mainstream retail via Woolworths and progressive recovery in food service, with sales growing 6% on the prior year. Always Fresh and Fehlbergs' largely maintained sales and market share in key categories, despite significant supply shortages and the reduced promotional programs. These positive factors partially offset a number of challenges, including local and global supply chain disruptions, inflationary impacts on European products, and internal one-off restructuring costs incurred as part of streamlining our local operations to drive efficiencies.
In our animal feeds business, CopRice, revenue increased 41% to AUD 161.1 million, while the segment recorded a pre-tax loss of AUD 5.5 million, compared with a pre-tax loss of AUD 4.5 million last year. There was revenue growth across most of the product categories, with increased volumes and prices at the Hamilton Mill in New Zealand, which was acquired in financial year 2021, and that contributed revenue of AUD 15.6 million compared with just AUD 1 million in the prior period. The recently acquired Pryde's EasiFeed was also a strong contributor, generating revenues of AUD 7.4 million and pre-tax profit of AUD 1.3 million within the first three months of ownership. Greater availability of Australian rice by-products also had a positive impact on the business and the performance of the Leeton bran stabilization plant.
Despite these gains, a range of factors continued to impact CopRice's profitability. These included continued wetter than normal conditions in Eastern Australia, contracting the supplementary feed market, driving more aggressive price competition and putting additional pressure on margins. There were also COVID-19 related operational delays on supply chains for ingredients, capital works at the Leongatha feed mill, which was delayed in its commissioning, and commercial and operational challenges with integration of newly acquired assets. Now finally, turning to our corporate segment, which captures the income and the costs of holding and financing assets that are used by both the Rice Pool business, representing A Class shareholders, and the profit businesses representing our B Class shareholders.
Pre-tax profit for the segment remains primarily driven by a range of inter-segment charges, such as the brand and asset financing charge, as well as items not allocated to other segments, such as the costs or incomes associated with various corporate activities. Pre-tax profit for the segment was AUD 12.6 million, down 14% from FY 2021, while EBITDA was AUD 26.4 million, up 1% on prior year. Asset financing and brand charges from the Australian Rice Pool business was up 31% on prior year to AUD 18.6 million, thanks to the return of Riverina Rice and the corresponding increase in activity and branded sales. This increase was partly offset by a corresponding decrease in brand charge from the International Rice segment.
Despite higher charges, profitability was lower due to an increase in overheads, including labor and recruitment costs, as the group implemented strategies to attract and retain talent in financial year 2021, benefiting from non-recurring items as well. I'll now hand back to Rob to recap on our strategy and cover our outlook for next financial year.
Thanks very much, Dimitri. Before I touch on the outlook for next year, I think it's worthwhile recapping our growth strategy, given it underpins the overall direction of the company and our business decisions. At its core, the strategy is designed to optimize returns for both classes of shareholders by increasing profits and reducing earnings volatility, adapting our product range to take advantage of changing food trends, and securing a sustainable and reliable global supply chain. As demonstrated over the last few years, our people have made significant progress against each of these key objectives, despite significant headwinds, including two consecutive years of near record low Australian rice production and COVID-19. All of this can be seen in these results, and we are as committed as ever to continuing to drive shareholder value by delivering against these core objectives and our 2024 internal growth targets.
As an organization, I'm proud that we've been able to set clear and measurable goals which have not changed despite significant global disruption over the last two years, and we've demonstrated consistent delivery against these. We're proud of the fact that we told you what we were going to do and have delivered and continue to deliver against it. Now, looking ahead to financial year 2023, we expect top line revenue to continue to build. While last year finished strongly, this one has started with worsening inflationary pressures on key business inputs and costs and continuing volatility and disruption to global shipping, which is placing pressure on earnings. However, we will seek to recover the additional costs incurred progressively throughout the year.
Against that backdrop, the continued resurgence of Australian rice, coupled with SunRice's multi-origin, multi-market rice capability, has us well-placed to benefit this year from an environment where key markets are undersupplied due to factors including broader disruption from the Ukraine conflict and a number of rice growing regions either in or entering drought around the world. The Riverina crop just harvested should underpin positive contribution to both A Class and B Class shareholders through strong returns in the Australian Rice Pool business and favorable inputs in a number of profit businesses, further demonstrating the complementary nature of the group's business model.
Looking ahead to planting for the next Australian Riverina crop, which will be processed and marketed in financial year 2024. Seasonal conditions, water availability, and water pricing remain highly favorable, with water storage levels in the southern Murray-Darling Basin connected system, the highest at this point in the season in more than 20 years. The foundations laid since financial year 2017 under our strategy have so far delivered positive outcomes through the cycle, and should see the business well-positioned for this financial year and the future. In addition, our diversified portfolio and strong balance sheet mean we're currently well-placed to take advantage of further expansion opportunities, either organically or through acquisitions. Continued execution of the SunRice Group's sustainability strategy remains a key priority for the coming financial year.
Having completed significant work across the group to articulate the six priority ESG areas and related ambitions and targets, all business units have now developed individual sustainability plans and actions aligned to the business plans and the broader growth strategy for financial year 2023. I'll now hand back to the operator, and we'll look to take your questions. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Alan Franklin with Canaccord Genuity. Please go ahead.
Morning, Rob. Morning, Dimitri. Hope you're well. Great to see the results yesterday and, thanks for your time this morning. Rob, can I just kick off with a couple of questions around the rice dynamics globally, please? Perhaps just starting on the supply side, just in terms of how you're feeling about the different international agreements and the ability to get the actual rice out of those agreements in the coming 12 months.
Good morning, Alan. Yeah, certainly. I think we're particularly well-positioned, frankly. When we have a look at the various sort of supply side dynamics, you know, clearly we've come through a couple of years of bad drought in Australia, and this last year we've been delighted to see the rebound in rice production. From my comments earlier, you'll note that the outlook for water is particularly favorable. We've also positioned ourselves with regard to other supply origins well and are typically long at this point in the year. When I have a look at the northern hemisphere in particular, the Californian crop is at least 50% down.
We're seeing reports of the Italian and Spanish and other European origins likely to be short with very hot, dry conditions, effectively drought conditions in those markets. We're actually well-positioned. However, of course, we need to get rice from here and from other origins to those destinations, and therefore, the international shipping is probably the fly in the ointment. You know, shipping costs are still extraordinarily high, and shipping availability on some of the routes that we rely on is problematic. We're well-positioned. There's some sort of storm clouds ahead still, you know, still some remaining from the last lot, but we're well-positioned on the basis that we've got a good supply side.
We believe that we can rely on that supply side, and there's a good strong demand in global markets.
Interesting. Thank you. Perhaps just on the demand side, I guess two little pieces to it, but just in terms of how you're feeling about the pricing, the attainable pricing in the coming period, and the sort of demand for your products, on the sort of branded rice side. You know, it feels like there is some buoyancy there, but just sort of checking in if you think that carries through.
Yeah. Clearly there is a very strong demand. We've had to clearly take price in order to recover some of the costs in some key markets around the world. We always seek to offer a sort of a good, better, best approach. Obviously in the wealthier economies, the best tends to still be very affordable. In some of the economies around the world that are perhaps slightly more stressed, we make sure that if people drop out of the best proposition, that there is still another couple of levels to go where we can catch that consumer demand.
In certainly in some of the more impoverished nations around the world, it comes to baseline food security, where they know they can rely on an affordable, high quality, and food safe product from us, even if they can't afford to to indulge in in the the higher value propositions that we take to market. It's a constant sort of shuffle through the year as we sort of gauge the demand, the elasticity at the price points that we've had to take in various markets, and then we satisfy it with some part of our portfolio, looking to, of course, always make a good return for the shareholder on the way.
No, perfect. Thank you. Then maybe just a sort of follow-up question on the cost side. You did sort of touch on, you know, perhaps you're sort of lifting prices in some markets where it's allowable. Just interested in terms of the mechanisms you have at hand to try and cover off on some of these cost pressures. Yeah, rising prices is sort of one element. Is there sort of the ability to change production patterns or locations of production in some of the different businesses to sort of try and lower costs?
Yeah, what we always do is look to work with our customers, because often we have to pass these prices on through customers, and we need to make sure that we work with our customers to make sure the offering to the end consumer is always appropriate. And we do that in a very collaborative manner. I have to say that some of the costs that have come at us recently associated with the Ukraine crisis are quite extreme. So you know, if you think about some of the range of, in Riviana, particularly with the KJ&Co acquisition, when we're importing baked goods from Europe that have a very high provenance. Nevertheless, they have, you know, wheat, sunflower oil and energy in them.
As you might imagine, with what's happening to those pricing metrics around the world, and that puts a lot of pressure on. We certainly look then for not only to maintain that range for its high provenance, but potentially to onshore some production to try and reduce some of the cost base and potentially back up with range extensions that may not have quite the same provenance but still offer a very good quality product to consumers. You might see that coming from us during the course of this year as we work that through.
Helpful. Thank you. Just the last one from me, please. Just that the shape of recovery that we should be thinking about within CopRice, understand the Pryde's EasiFeed and that sort of annualizing through this year, but perhaps just some sort of commentary, how you're feeling about the New Zealand business, and separately, the sort of Australian business coming out of tougher conditions.
Yeah. We're very comfortable with the various acquisitions that we've made in this segment. We bought well, and they're strategically well-placed. What we had accounted on which didn't deliver is that the wet cycle and therefore good seasonal pasture conditions have probably hung around for longer than we might have anticipated. That's reflected in this year's result. We're gradually building market share in the dairying sector. Some of the sheep sector's coming back. Therefore, even though pasture conditions are looking still as though they're very buoyant and good for farmers, so some of that recovery might still be a bit slow in the coming year. The Pryde's EasiFeed business is far less sort of weather-dependent.
You see, you can see in the results for the quarter that we own the business is profitable. Its sales are going well, and it's more branded, more consistent earnings. You should expect to see us to build those parts of the CopRice business over time. Also, looking to build market share in a depressed complementary feed sector, and look forward to the recovery of that sector, where perhaps more normal seasonal conditions allow us to take advantage of the assets that we're holding in some of these key areas.
How helpful. Thank you. That's all for me.
Thanks, Alan.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. We will now pause a moment to allow for any further questioners to register. There are no further questions at this time. I'll now hand back to Mr. Gordon for some closing remarks.
Thank you very much, operator. I'd just like to thank everybody who's taken the time to attend the call today and for the questions. We look forward to another challenging year coming, but nevertheless, one in which I think we have the skills to navigate the challenges thrown at the business. On behalf of myself and Dimitri, I'd like to thank you for joining. We appreciate you taking the time.
That does conclude our conference for today. Thank you for participating. You may now disconnect.