December 18, 2009

Graincorp to sell service centres, exit merchandise

Agribusiness GrainCorp Ltd. said Friday (December 18) it will sell its merchandise outlets and exit the sector by the end of this fiscal year ending Sept. 30, 2010, at a cost of A$3.5 million (US$3.11 million).

The decision follows a three-month review of the business, which concluded that GrainCorp needed to significantly expand the merchandise operations to become profitable, Managing Director Mark Irwin said in a statement.

"During the review, we didn't find any attractive expansion options," he said.

Eight outlets have already been closed with another 17 to follow.

In reporting a net profit last fiscal year of A$63.2 million (US$56.20 million) on Nov. 25, GrainCorp said its merchandise outlets had a difficult 2009, suffering a loss of A$23 million (US$20.45 million) before interest and tax, with an A$11 million (US$9.78 million) write down in the value of inventory, much of which was because of sharply lower fertilizer prices.