World: United Malt CEO to retire
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United Malt is on the hunt for a new chief executive as it tries to deal with the financial hangover from a severe drought in Canada that hit operations in North America, AFR reported on October 6.
Mark Palmquist is bowing out 21⁄2 years after leaving the top job at GrainCorp as part of the demerger that created United Malt.
He announced his intention to retire on October 6, less than a week after United Malt closed the books on a difficult 2021-22, but intends to stay on until a replacement is found.
The company revealed a profit downgrade triggered by soaring costs in August and last month reached agreement with bankers to amend net debt to earnings covenants after being in breach.
United Malt has paused its search for a chief financial officer to replace Amy Spanik, who left in July, and for a chief commercial officer responsible for the sales and marketing operations pending the appointment of a new chief executive.
In the wake of the August profit downgrade, United Malt chairman Graham Bradley said the board with disappointed with the 2021-22 performance and outlook, and the business needed a “material reset”.
Speaking to The Australian Financial Review on Thursday, Mr Bradley said: “We think all the necessary changes are either in place or in progress, and that we won’t lose any momentum over the next period while we search for Mark’s successor.”
Mr Bradley said it wouldn’t be easy to find a replacement given the competition for executive talent in North America, where the search will focus, and the specialised nature of the malting business.
It is understood United Malt is well advanced in re-writing supply contracts with major brewers to avoid the problems it faced in the past 12 months in trying to pass on price hikes for barley and in energy and freight.
Mr Bradley said a tight malt market meant brewers were concerned about securing supply.
Mr Palmquist, who is based at the United Malt operations in Vancouver in Washington State, said he would leave behind a “strong foundation for the business with a significant improvement in financial performance anticipated in 2022-23 and beyond”.
United Malt is due to release results for the year to September 30 on November 15, a day before GrainCorp.
The fourth-biggest global supplier of malt to the beer and whisky industry expects underlying earnings before interest, tax, depreciation and amortisation to be $100 million to $108 million.
The forecast was downgraded in August from previous guidance of $115 million to $140 million.
However, the company has said underlying earnings should bounce back to between $140 million and $160 million and there are signs a better Canadian barley crop will work in its favour.
United Malt was forced to ship barley from Australia and Denmark to Canada in 2021-22 to meet a shortfall in local supply.
The poor quality of the barley that was produced in Canada also pushed up costs and compounded cost increases in energy and transportation.
The malting business, which operates 12 processing plants across the United States, Canada, the United Kingdom and Australia, was seen as less exposed to seasonal fluctuations when it was spun out of GrainCorp in March 2020 just as the drought in NSW and parts of Queensland and Victoria started to break.
GrainCorp has since benefited from big harvests, while United Malt was hit by lockdowns of pubs and clubs during the worst of the COVID-19 pandemic, and then drought in Canada.
