Ricegrowers (ASX:SGLLV) also known as SunRice, is a global Fast Moving Consumer Goods business focused on rice and related products. It commenced as a growers cooperative in the Riverina district in South East Australia which is one of the country’s prime food growing regions. It has now grown into a global business, sourcing rice from many different countries and selling into a wide network of countries.

Ricegrowers revenue is sourced from five main segments. The breakdown of revenue from the first half of FY24 is shown in the chart below.


The Rice pool relates to the original part of the business whereby growers from the Riverina district sell their rice harvests into the business. This segment then derives its revenue from selling the rice to external customers or selling it at arms length prices to other segments within the group. About 25% of the Rice pool revenue comes from inter-segment sales. That is why there is an eliminations segment in the pie chart to back out those internal sales. The producers are paid a price per paddy tonne for their rice harvests, called the pool price, which takes into account the prices received from the sale of rice along with the costs involved in getting the rice to market. As such, the Rice pool segment does not make a profit as outgoings are always equal to revenue. The growers who are supplying their rice to the pool all have an ownership stake in the business which will be explained below.

The international rice segment is the largest component of revenue at 46%. They sell rice into a wide range of countries, especially the Middle East and the Pacific nations. In addition to sourcing rice from the rice pool, they also source rice from a wide network of other countries. Favourable conditions over the first half enabled them to increase revenue by 26% and profits before tax soared by 163%. This segment faces risks from currency fluctuations. They have a significant business in Papua New Guinea and there is no facility in international FX markets to hedge the Kina. The depreciation of the PGK put pressure on their margins.

CopRice makes feedstock and dog food. It accounts for about 14% of revenue and has an EBITDA margin of 6%. The Rice Food segment has the highest…

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