GRAINCORP Limited has today upgraded its 2020-21 (Oct-Sep) earnings guidance to $310-$330 million from $255-$285M seen previously ahead of its FY21 results to be announced on November 11.
The guidance figure represents earnings before interest, tax, depreciation and amortisation (EBITDA) before significant items, and the FY21 figure will include a $70M payment by GrainCorp under the Crop Production Contract.
Guidance for the FY21 underlying net profit after tax (NPAT) before significant items has been lifted to $125-$140M from $80-$105M seen previously.
Final results are subject to variables including the timing of grain exports, the strength of the new-crop market, and weather.
GrainCorp is Australia’s biggest bulk handler, and operates seven export terminals stretching from Mackay in Queensland to Portland in Victoria, as well as a vast bulk-handling network in Queensland, New South Wales and Victoria.
GrainCorp managing director and CEO Robert Spurway said current heightened demand for Australian grain has bolstered an outstanding year for the agribusiness segment.
“We are pleased to upgrade our FY21 earnings guidance, which reflects the strong performance of our east coast Australian grains business following the bumper 2020-21 harvest,” Mr Spurway said.
“Post-harvest winter receivals and higher summer receivals, coupled with a favourable outlook for the upcoming winter crop, have supported strong export volumes, forward contracted sales and supply-chain margins.”
“We’re seeing excellent demand for high-quality Australian grain, particularly with recent weather-related crop production challenges in the Northern Hemisphere, and July delivered our biggest month of contracted sales on record.”
GrainCorp’s network has taken in approximately 16Mt from growers in the 2020-21 harvest, a record which eclipses its previous biggest intake of 15Mt in 2016-17.
Mr Spurway said he is cautiously optimistic for growers as they draw closer to the 2021-22 winter-crop harvest, with sites in Central Queensland expecting to receive grain from next month.
GrainCorp expects to see total exports for FY21 at the higher end of previous expectations, namely 7-8 million tonnes (Mt) and, as a result of higher-than-expected summer crop receivals, grain carry-out at September 30 is also expected to land at the high end of the foreseen range of 3.5-4.5Mt.
Mr Spurway said the company is working around the clock to move as much leftover grain from that intake as possible before the new season crop is ready.
“Growers are driving past their local sites and noticing we’re still carrying grain from last harvest, which is typical after a large production year.
“Our supply chain is running full tilt, with 3000 truckloads and over 50 trains being loaded out of the network each week to move that grain.”
Mr Spurway confirmed GrainCorp is preparing for the another large winter-crop harvest with a strong maintenance and capital investment program.
“We’re hearing reports of good potential in the upcoming crop, based on factors including area planted, sub-soil moisture levels, season-to-date rainfall, and longer-term weather forecasts.
“Currently, our teams are working to ensure our network is equipped to handle the new crop at the right time, and in the right locations.”
“Our supply chain is executing a heavy outload program on road and rail, moving grain carried from the last winter crop harvest either domestically or overseas.
“We are building 1Mt of new storage capacity in time for harvest, and reopening flex sites to accommodate the anticipated demand.”