NEW EMERALD Grain chief executive David Johnson says the parent company of the agribusiness, giant Japanese trading house Sumitomo, has conducted a review into Emerald’s operations and will retain its 100 per cent stake in the company.
Sumitomo’s announcement marks the end of a period of intense industry speculation regarding potential buyers of the Emerald business.
Mr Johnson said the company would now look to focus on driving volume through its upcountry and port supply chain assets.
He was last week announced as the successor to the retiring John Murray, who departed the business after three years at the helm.
His comments regarding the bulk handling focus of the business from now on mark the culmination of a gradual shift in focus at the company, which began as a grain marketing business before growing its bulk handling network.
It now has 11 upcountry sites in Victoria and NSW, ownership of the Melbourne Port Terminal, along with a share in the Quattro port facility at Port Kembla.
However, Mr Johnson said the drive to get grain through its network did not meant Emerald would scale down its trading division.
“The two are very complementary, we need the trading division to drive grain through the bulk handling network,” he said.
He said around 60pc of deliveries to the upcountry network were sold to Emerald, a figure that rises at the port level.
Regarding its structure at the upcountry sites, Mr Johnson said the company would focus on providing efficiency through quick turnarounds.
He said it was likely there would be a relatively small pool of segregations at the sites in order to create these efficiencies.
“We think this year, with prices where they are, it will not be a season where you win grower business through pricing, but rather through service.
“In order to do this we are making sure we are currently out turning the last of the old crop to make sure there is as much capacity at the sites as possible.”
Mr Johnson, a grains industry veteran, whose CV includes stints at AWB, as manager of the national pool, and Olam before taking on his last role as chief operating officer at Emerald said many of the initiatives implemented during Mr Murray’s time at the helm, such as the transitioning out of pool management into cash purchases only, would continue.
He also said there would be no further large scale redundancies at the business, which shed a substantial amount of jobs as part of a restructure last year.
In terms of the company’s future, Mr Johnson said he believed Sumitomo’s decision to keep ownership of the business would be rewarded.
“Even in the short-term, things look considerably better in terms of production this season in our major catchment areas than over the last couple of seasons.”
He said he believed there would be a different dynamic in terms of the trade’s approach to shipping slots after several businesses got caught struggling to accumulate enough grain to execute their slots.
“I think people will be a lot more cautious with the way they approach their shipping programs, there will be a lot more open capacity early on, but I still think the business will be done – the grain is out there, it is just that the marketers will get the business locked in before organising shipping.”
Mr Johnson, together with the Sumitomo executive thanked Mr Murray, who will continue with Emerald Grain as a non-executive director, for his efforts in his time in the top job.
