SunRice Faces Crop and FX Headwinds After Strong Profit Growth in 1H FY26
SunRice reported a 14% rise in net profit for the first half of FY26 despite a revenue dip, reaffirming its growth outlook and updating paddy price guidance amid a forecast drier season.
- NPAT up 14% to $36.6 million despite revenue decline
- EBITDA increased 5% to $71.3 million with margin expansion
- Updated CY25 paddy price guidance to $385–$420 per tonne
- Net debt reduced to $169 million, gearing improved to 20%
- Strategic restructuring and 2030 Growth Strategy investments underway
Solid Earnings Growth Despite Revenue Pressure
Ricegrowers Limited, trading as SunRice, has delivered a robust first half performance for FY26, with net profit after tax (NPAT) rising 14% to $36.6 million, even as revenue softened to $884 million. The company’s EBITDA climbed 5% to $71.3 million, reflecting disciplined cost management and operational efficiencies that helped offset top-line challenges.
SunRice’s EBITDA margin improved to 8.1%, up from 7.4% in the prior corresponding period, underscoring the effectiveness of its strategic focus on margin enhancement and brand growth. The interim dividend was increased by 33% to 20 cents per B Class share, signaling confidence in cash flow and shareholder returns.
Strategic Growth and Market Dynamics
The company’s growth was driven by strong brand performance and expanded distribution in priority markets such as the Middle East and the United States. Notably, the launch of premium Sunwhite Basmati rice and expanded distribution networks contributed to gains in these regions. However, revenue declines in Pacific markets and foreign exchange headwinds, particularly from the Australian dollar and Papua New Guinea kina, presented ongoing challenges.
SunRice is actively investing in its 2030 Growth Strategy, which includes innovation in product offerings like Toscano bakery items and SavourLife snacks, as well as operational restructuring to better align with market priorities. The recent divisional restructure aims to position the company for sustained growth over the next 75 years.
Crop Outlook and Paddy Price Guidance
Reflecting current agricultural conditions, SunRice updated its CY25 paddy price guidance to a range of $385 to $420 per tonne, narrowing from the previous $380 to $450 range. This revision accounts for persistent low whole grain mill-out rates and the need to preserve premium Australian paddy amid an anticipated drier season for the CY26 crop in the Riverina region.
Despite the forecast for a substantially lower Australian crop next year, the company remains confident in its diversified global sourcing model, which now supplies the majority of rice for its branded products. This multi-sourced approach mitigates risks from weather variability and supports supply chain resilience.
Financial Position and Capital Management
SunRice strengthened its balance sheet during the half, reducing net debt to $169 million from $218 million and improving gearing to 20%. The leverage ratio fell to 1.1 times EBITDA, reflecting prudent capital management. Capital expenditure was focused on maintaining core assets and strategic growth initiatives, with $11.8 million invested in the period.
The company reaffirmed its full-year FY26 growth outlook, supported by brand strength, innovation pipelines, and operational efficiencies, while acknowledging ongoing market and geopolitical uncertainties that could moderate growth.
Bottom Line?
SunRice’s solid half-year profit growth and strategic investments position it well, but crop and market uncertainties will test resilience in FY27.
Questions in the middle?
- How will the anticipated lower CY26 Australian rice crop impact SunRice’s supply chain and margins?
- What are the potential effects of ongoing currency volatility on SunRice’s import costs and pricing strategies?
- Will the company’s strategic review lead to changes in its dual-class share structure or governance?
