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Cotton marketer & trader Queensland Cotton amends profit expectations

15 Jun '05

2 min read

Cotton marketing and trading group Queensland Cotton Holdings Ltd revised its expected 2006 operating profit after tax, due to a one-off combination of trade and climate factors.

Continuing unfavourable weather conditions that severely impacted winter crop plantings in Australia, as well as international trade pressures, have resulted in a reduced outlook for full year net profit to around A$10 million based upon last year's accounting standards.

While this outlook is 60% above the company's result for the 2005 year ($6.3 million), it is below early expectations of an operating profit after tax in excess of $15 million, on an equivalent accounting basis. It should be noted that the 2006 result will be prepared in accordance with the new IFRS guidelines.

CEO Richard Haire said the 2005 Australian cotton crop has been marketed in an environment of unusual uncertainty, both domestically and overseas. Factors contributing to this uncertainty include weaker domestic prices for much of the season and abnormally volatile international demand, in part the result of unusual trade interaction between China and the United States.

Queensland Cotton's strategy of domestic business diversification and its growing global reach are expected to play an increasing role in reducing future volatility.

“The Australian cotton market is sensitive to international cotton commodity movements. It is for this reason that Queensland Cotton continues to pursue a strategy of risk management through broader geographic reach and building a larger procurement and customer base,” said Mr Haire.

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