GRAINCORP is expecting to report a drop of about 50pc in profit for the financial year ending 30 September 2023, with the company flagging a return from the record highs of FY22.
In its earnings guidance released to the ASX last week, the company has predicted a net profit after tax result of $180-220M, down from $380M in FY22.
The FY23 earnings before interest, taxes, depreciation and amortisation is expected to fair slightly better, down about 30pc from the FY22 result of $702M to $470M-530M.
Despite predicted drops in earnings and profits, the FY23 predictions are still far above the results from the two previous financial years.
In FY21, GrainCorp reported an EBITDA of $331M and a NPAT of $139M, while the FY20 results were a loss of $16M and an EBITDA of $108M.
GrainCorp managing director and CEO Robert Spurway said the earnings guidance was still a strong result for the company.
He said FY23 earnings will be boosted by another large east coast Australian (ECA) winter crop, robust demand for Australian grain, oilseeds and vegetable oils.
“FY22 was a record result for GrainCorp, achieved after two consecutive bumper ECA crops and record oilseed crush volumes, in an extraordinary global demand environment,” Mr Spurway said in a statement to the ASX.
“While the Northern Hemisphere has recovered from drought conditions, good global demand remains for Australian grain and GrainCorp remains well positioned with a high level of grain inventory and the supply chain infrastructure to serve our customers around the world.
“We expect GrainCorp to deliver a strong result in FY23 with our supply chains continuing to run at close to full capacity, strong execution from our teams, and positive global demand.”
Flooding delays receivals
Mr Spurway said the ECA 2022-23 winter-crop production was again “well above average, despite a challenging and delayed harvest”.
“On behalf of everyone at GrainCorp, I personally want to acknowledge the difficult weather conditions and flooding events that disrupted this harvest for many growers and challenged communities, including several of our own staff, in regional Australia.
“In some cases, the flooding caused crop abandonment, damage to local roads and infrastructure, and logistical challenges, both for growers and the GrainCorp supply chain.
“Our grain intake across the harvest period has totalled 11.9Mt year-to-date, supplemented with a high opening grain inventory position of 4.9Mt.
These receivals are down from the February 2022 intake figure of 14Mt.
“Year-to-date export volumes are 3Mt, down slightly on last year due to the disruptions experienced in the first quarter.”
Positive summer-crop outlook
The predicted FY23 profit and EBITDA results will likely be lifted by what is expected to be a strong summer-crop harvest for Queensland and New South Wales.
“Growers across Queensland and northern NSW have now started to harvest their summer crops, with ABARES forecasting a strong ECA sorghum harvest of 2.6Mt,” Mr Spurway said.
He said GrainCorp anticipated total receivals for FY23 for 13.5-14.5Mt, down from 16.3Mt in FY22.
Total exports for FY23 are expected to be 8.5-9.5Mt, on par with last financial year’s result of 9.2Mt.
“Our processing business has also started the year well, with high plant utilisation and good sales volumes.
“We expect improved earnings in FY23, compared to FY22, and are continuing to benefit from strong global crush margins and demand for vegetable oils.”
GrainCorp’s earnings guidance remains subject to a range of variables, including: second half grain volumes, timing and volume of grain exports, supply chain and oilseed crush margins, and new season opportunities in quarter 4.