New chairman at CBH’s Interflour Group

Interflour has replaced its founding chairman Imre Menschelyi as it soldiers on with a multi-million dollar turnaround plan partially bankrolled by WA grain growers.

Singapore-based Hermes GPE operating partner Luke Bugeja has taken the board helm from Interflour’s founding chairman and former CBH chief executive Mr Menschelyi, who stepped down from the board in December after chairing it for 14 years.

His retirement came two months after WA co-operative CBH announced it would provide a $US30 million ($42 million) loan to Interflour to help rectify its performance.

Based in Singapore, Mr Bugeja has held investment and operational roles spanning both investment management in infrastructure and aviation over the past 31 years, with Qantas Airways, Virgin Blue, Macquarie Bank, Ontario Airports Investments and Changi Airport Group.

Mr Bugeja said he looked forward to working with the Interflour Group board and management.

CBH and its 4000 grain grower members own a 50 per cent stake in Interflour with joint-venture partner Origold.

The two companies formed Interflour in 2005, when they acquired six mills in Indonesia, Malaysia and Vietnam capable of milling 4200 tonnes a day. Interflour now owns 10 mills and can mill 7410 tonnes a day.

CBH chairman Wally Newman thanked Mr Menschelyi for his service and leadership during his 14 years at Interflour.

“Since Interflour was established in 2005, the business has grown significantly, diversified into malt production with the launch of the Intermalt in Vietnam, and extended its service and product offerings for customers,” he said.

“Imre’s leadership assisted the Interflour management team during the early period of change as well as in responding to the more recent heightening of competitive pressures in flour milling in Asia.”

Since founding, Interflour has spent more than $US300m on capital and maintenance expenditure, including about $US100m building a malting facility in Vietnam and a flour mill in the Philippines, without any equity from CBH and with the majority of this being funded by debt.

Initially pegged as a boon for WA grain growers, the company has been operating in an increasingly competitive flour milling and malting industry,

In 2018, Interflour posted a $102 million loss, of which CBH’s share was $10.2 million, followed by a $15.2 million loss in 2019.

CBH stumped up half of an interest-free $US60 million shareholder loan with joint venture partner Origold to the flour miller in August, to help rectify its financial performance.

CBH’s $42.9 million contribution caused outcry among some WA grain growers, who questioned whether it was a good way to spend growers’ money. At the time, CBH said the money would support the flour milling and malting business’ 10-point turnaround plan, and balance debt and equity levels.

The company posted a 91 per cent increase in Interflour’s earnings before interest, tax, depreciation and amortisation to $US141 million in 2018-19.

Mr Newman said Interflour’s turnaround plan was working.

“While Interflour continues to operate in a highly-competitive environment, efficiency and sales initiatives have resulted in improved performance, particularly from the core South East Asian flour business as well as their Vietnamese port asset and the Intermalt facility,” he said.

Interflour is currently led by chief executive Avi Fintz, who stepped up from the company’s chief strategy officer in January 2018.

Mr Fintz replaced Greg Harvey, who stepped down after 13 years at the helm and is now the chief executive of Andrew Forrest’s Harvest Road Group.