Miller’s Asian growth points to listing

Brad ThompsonThe West Australian
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Interflour is focused on completing a big expansion of milling capacity in South-East Asia amid growing speculation that its success is likely to trigger a partial listing on the Singapore stock exchange.

Joint owners CBH and Indonesian billionaire Anthony Salim have been considering their options for a partial listing for some time as Interflour builds production to 10,000 tonnes a day and prepares to commission a new malting plant.

A number of CBH directors talked openly about taking some value out of Interflour during recent grower elections.

CBH chairman Wally Newman stressed that any decision on listing would be made in consultation with Mr Salim.

The plans for Interflour — which has flour mills in Turkey, Vietnam (two), Malaysia (four) and Indonesia (two) — have been in the spotlight since Australian Grains Champion launched a bid to corporatise CBH with financial backing from GrainCorp and First State Super.

Interflour chief executive Greg Harvey said yesterday that 2015 had been a tough year for flour millers in Indonesia and Malaysia. He said the company remained on track with construction of a malt plant near its Cai Mep port facilities in Vietnam and a flour mill at Subic Bay in the Philippines.

Mr Harvey said the malt plant, with initial capacity of 110,000t a year, should be in production early this year and Subic Bay in production by July next year.

“We are right in the middle of a big expansion with the malt plant and the Philippines mill, and we have bought two flour mills in the past two-and-a-bit years,” he said.

“All of those will be on stream and working as they should be by 2018. At that stage our goal as management is to give some options to shareholders as to how they might want to realise value from all of that growth.”

Interflour made an operating profit of $US35.5 million in 2015 with sales revenue of $US550 million. The result was affected by big currency devaluations in Indonesia and Malaysia, but Interflour fared much better than many of its competitors.

It is estimated annual sales revenue will jump to between $US800 million and $US1 billion by 2018 when the expansion is complete. Mr Harvey revealed Interflour had shelved plans to build a mill in Thailand because of sovereign risk associated with the $US30 million investment.

Interflour is also holding land near Johor Bahru in Malaysia it had earmarked for a new mill. It opted to boost production at existing mills in the country in the short term but has not ruled out building on the site before the end of the decade.

The Interflour board met in Singapore this week where Mr Harvey chaired part of the Global Grain Asia conference.

“The sentiment at the conference was that it had been a tough, tough year, probably the toughest since the Asian crisis in the late 1990s for the whole industry,” he said.

In Indonesia, flour demand fell 2.5 per cent against forecasts of 6 per cent growth.

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