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GrainCorp posts record half-year profit

Grain Central, May 11, 2022

Grain bunker filling during an earlier harvest. Image: GrainCorp

GrainCorp Limited has posted record results for the half-year ending 31 March 2022 (HY22), with a net profit after tax (NPAT) of $246 million, up from $51M on its corresponding HY21 figure.

The earnings before net interest, tax, depreciation and amortisation (EBITDA) also tripled on the previous year, with a HY22 result of $427M, up from $140M.

Managing director and CEO Robert Spurway said the company can also confirm the FY22 guidance, released last month, of an underlying EBITDA of $590-$670M as well as an underlying NPAT of $310-$370M.

“The result reflects excellent performance across all business areas and resilience in our supply chain,” Mr Spurway said in a statement.

“Global demand for Australian grain, oilseeds, and vegetable oils has remained elevated, after two consecutive bumper crops in east coast Australia (ECA) and during a period of tight global supply.

GrainCorp Managing director and CEO Robert Spurway

“The conflict in Ukraine and resulting Black Sea trade disruptions have also created uncertainty in global grain markets, prompting buyers to seek alternative sources of supply.

“This has further increased demand for Australian commodities.”

Increase in grain handled

GrainCorp chief financial officer Ian Morrison said the bumper 2021-22 harvest reflected in an increase to GrainCorp’s total grain handled of 38 million tonnes (Mt), up from 30.4Mt in HY21.

“This year saw a second consecutive crop of over 30Mt on the east coast of Australia and, combined with the higher carry-in from last year’s crop, this lead to another increase in grain tonnes handled through our supply chain,” Mr Morrison said.

“Total receivals were 14.7Mt in this half and that is up from 14.5Mt in the prior corresponding half.”

Mr Morrison said heavy rainfall and flooding in parts of Queensland and New South Wales created some challenges for GrainCorp during HY22.

“It is also pleasing to be able to highlight the outstanding execution of our teams to be able to run our supply chain at close to 100 per cent capacity.

“The teams have had to work hard to overcome some flood-related disruptions to continue delivering for our customers.

“This saw us export 4.5Mt  of grain in the first half and that compares to 3.1Mt in the prior year.”

The processing operations reported an EBITDA up almost 200 per cent to $70M, with global demand coupled with international production and supply chain challenges fueling this result.

Crush margins were supported by strong global demand for vegetable oils, driven by global production challenges in canola and soybean, disruption of supply out of the Black Sea region, and strong demand for renewable fuel feedstocks.

Strong 2022-23 outlook

Mr Spurway said the outlook for the 2022-23 crop is positive, with ideal planting conditions expected for the upcoming winter crop.

“Recent weather patterns and continued La Niña conditions have provided excellent planting conditions for the 2022-23 winter crop to date, building confidence in grain supplies from ECA and further supporting export sales and supply chain margins.

“GrainCorp is in a strong position to maximise opportunities through the current cycle, while also progressing our strategic initiatives in our core, growth and ESG areas.

“Planning is well under way for additional investment in the lead-up to the 2022-23 harvest to efficiently manage the volumes to be delivered by growers.”

He said this the outlook and the FY22 guidance remains subject to a range of factors, such as, second half grain receival and export volumes and the duration and extent of global trade disruptions.

GrainCorp Ventures launch

Mr Spurway said the company has launched a new $30M corporate venture capital fund to invest in AgTech start-ups.

He said the fund will focus on key investment areas of analytics and optimisation, smart supply chains, biotechnology and sustainability and circular economy.

Source: GrainCorp

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