GrainCorp talks up energy, sustainability in HY results

Liz Wells, May 16, 2024

GrainCorp last month invested in Singapore-based company Peptobiotics.

EASTERN Australia’s major bulk handler, GrainCorp, had precious little to say about bulk handling today in releasing its half-yearly results.

Instead, chief executive officer and managing director Robert Spurway and chief financial offer Ian Morrison focused on the ASX-listed company’s diversifying portfolio, including its feed, fats and oils segment now rebranded as nutrition and energy.

Financial results for the six months to March 31 were indicated in GrainCorp’s earnings guidance and preliminary figures released May 6, with underlying earnings before interest, taxes, depreciation, and amortisation coming in at the predicted $164 million.

This is down 57pc from the 1H23 result of $383M, while net profit after tax at $50M is 75pc down on 1H23 NPAT of $200M.

Overall, Mr Spurway said GrainCorp was well placed to fund its new and recent investments.

“Our balance sheet remains exceptionally strong, with $495M in core cash.”

“We’re making good progress on our crush-capacity expansion…and we continue to broaden our portfolio across agtech and sustainability.”

Lean time for grain

Total grain handled at GrainCorp’s sites stretching from Central Queensland to south-west Victoria in 1H24 at 25.4Mt was 27pc below 34.8Mt in 1H23.

“We’ve certainly seen the impact of drier conditions last year in New South Wales and Queensland…and that impacted total tonnes handled,” Mr Spurway said.

While dry conditions are of concern across southern Australia, Mr Spurway said the season is looking bright for Qld and NSW, with potential for solid exports over the bridging months of the 2023-24 and 2024-25 crop years.

“We’d expect carryout to be in the order of 3-4Mt, so we’ve got reasonable opportunity for export in that first quarter of the year.”

Reduced 2023-24 volume out of Western Australia, Qld and northern NSW, as well as tight margins, have all had an impact on GrainCorp’s agribusiness EBITDA, which in 1H24 was $101M, down from $226M in 1H23.

“What we’re seeing is that growers are being hesitant to sell.”

“As a result we expect grain and oilseed margins to remain challenging for the remainder of 2024.

Based on good subsoil moisture reserves, Mr Spurway said the opportunity existed for “well above-average crops” in eastern Australia.

Record crush achieved

GrainCorp is Australia’s biggest oilseed crusher, and volume handled in 1H24 was a record 282,000t of canola, up from 256,000t in 1H23.

Mr Spurway said expansion of crush capacity by 750,000-1Mt was being investigated with a possible total capital expenditure “in the order of $500M”.

“We are looking at opportunities on both the west coast and east coast of Australia,” he said, adding that proximity to oilseed supply and offtake sites needed to be carefully weighed up.

This is being done via an ongoing joint study with IFM Investors.

On the sustainability front, GrainCorp in 1H24 received ISCC PLUS certification for its Numurkah, Vic and East Tamaki, New Zealand processing sites.

Mr Spurway also gave a nod to the Federal Government Budget handed down on Tuesday, which includes $18.5M over four years for a study on low-carbon liquid fuels, and also the Future Made in Australia initiative.

“Agrienergy growth is continuing to perform strongly in our business,” Mr Spurway said, adding that some new customers have come on board in the North American used cooking oil and tallow market.

Peptides for livestock the latest

The presentation also outlined GrainCorp Ventures’ most recent investment, made last month in Singapore-based start-up Peptobiotics, which has developed antimicrobial peptides as an alternative to antibiotics for livestock.

“Peptides seek to prevent disease and support growth, providing a humane, sustainable and productive alternate to antibiotics in feed ration,” GrainCorp’s presentation stated.

GrainCorp has also completed acquisition of XF Australia, trading as Performance Feeds and Nutrition Service Australia, in 1H24, with financial contributions expected to start in the current half.

“We’re seeing growth opportunities and good growth in the businesses that we have acquired.”

These have come from increased sales volume driven by demand for supplementary feed in Australia, which has offset declines in New Zealand sales volumes.

GrainCorp Ventures also has investments Zetifi, handheld grain, oilseeds, oils, and dry matter technology company Hone, soil additive Loam, ZoomAgri, and asparagopsis-based additive FutureFeed.




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