Friday, May 20, 2011

MSF to Cairns

Maryborough Sugar Factory has held their AGM this morning at Gordonvale. MSF have downgraded their profit forecasts, as reported at BusinessSpectator. They have also announced that the company will be renamed to MSF Sugar Limited and their head office will be re-located to Cairns.

"We will be re-locating the head office of MSF Sugar Limited to Cairns. We
believe this further demonstrates our commitment to the region and is what is
required to continue to build and grow a world class sugar business."

The name change and move reflect that the business is now largely based in the Far North. MSF merged with Mulgrave Mill a few years ago, and has recently acquired South Johnstone and Tablelands, as well as the now closed Babinda Mill. A positive move which draws attention to the agribusiness opportunities in the Far North, far preferable to the economically dubious idea of moving public servants to Cairns for the sake of it as a kind of regional welfare, rather than economic sense or efficiency.

Random observations from the CEO and Chairman presentations:

  • Much on sugar markets including recent price weakness on strong Thai production. A Thai company, with substantial operations in China, is now the largest holder in MSF just below the 20% takeover threshold. Local shareholders remain prominent following the Mulgrave merger.
  • The $AUD has not eroded competiveness so much because currencies such as Brazil have been almost as strong. There is a curious spray from the Chairman on irresponsible US monetary policy. There is much intellectual debate on this, however the logical presumption should be that the Chairman has all his assets in gold rather than sugar?
  • Capital spending on operational mills and rehabilitation spending on Babinda a positive.
  • Despite  closure of Babinda there is still surplus mill capacity and strategy to actively increase cane supply.  

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