BULK handler GrainCorp Limited has today announced an increase to its forecast FY22 underlying net profit after tax from $235-280 million to $310-370M, with bumper crops and strong demand for Australian grain and oilseeds behind the improved outlook figures.
The earnings before interest, taxes, depreciation, and amortisation (EBITDA) expected range has also improved from the previous figures of $480-540M to $590-670M.
GrainCorp last provided earnings guidance for FY22 to the market on February 7.
The company also expects to see total receivals of 16-17 million tonnes (Mt), is on par with the FY21 figure of 16.5Mt.
Exports are predicted to see a boost from the FY21 figure of 7.9Mt, with GrainCorp expecting 8.5-9.5Mt of grain to be sent off-shore in FY22.
Managing director and CEO Robert Spurway said the improved outlook reflected significant ongoing global demand for Australian grain and oilseeds, and favourable planting conditions for the upcoming eastern Australian winter crop.
“As we outlined at our AGM in February, we are seeing high global demand for Australian grain and oilseeds and strong supply-chain margins for grain exports,” Mr Spurway said.
“This has been driven by two consecutive bumper crops in east coast Australia (ECA), coupled with supply shortages in the Northern Hemisphere.
“The conflict in Ukraine and resulting trade disruptions in the Black Sea region have created uncertainty in global grain markets, with buyers looking for alternate sources of supply.
“This has further increased both the demand for Australian grain and oilseeds, and export supply-chain margins.”
La Niña ups crop confidence
Mr Spurway said favourable weather conditions have increased confidence for the 2022 winter crop.
“Recent weather patterns and continued La Niña conditions have provided excellent planting conditions for the 2022 winter crop to date, building confidence in grain supplies from ECA and further supporting export sales and supply-chain margins.
“Despite recent weather-related supply-chain disruptions across the ECA, we are continuing to operate our ports at close to full capacity, exporting as much grain as possible to international markets.
Oilseeds performing well
GrainCorp’s processing business is also performing extremely well, with oilseeds and foods benefitting from strong global demand for both crude and refined vegetable oils.
This demand has further increased due to recent supply disruptions from the Black Sea.
GrainCorp’s FY22 guidance remains subject to a range of variables, including: 2H half grain-receival and export volumes, supply-chain and oilseed crush margins, outlook for the 2022-23 winter crop, and duration and extent of global trade disruptions.
These variables are likely to endure for the remainder of FY22.
GrainCorp’s half-year results will be released in May 2022.