NSW-based GrainCorp has upgraded its full year profit guidance by more than 50% following a surge in grain receivals from new bulk wheat exporters.
The company said yesterday in a statement to the ASX that it now expects net profit for the year ending September 30 to range between $53 million and $63 million, up from earlier guidance of a result between $37 million and $42 million.
That will be a huge improvement on the near $20 million loss made in 2008 as the company was impacted by the drought.
The improved growing conditions and surge in production in the 2008-09 harvest has boosted the company.
Another good harvest is expected next summer, so long as weather conditions remain favourable.
The market liked the news and boosted the shares more than 6.7% to $8.
GrainCorp said the higher 2009 profit would result from higher than expected grain receivals, which are on target to exceed 9.5 million tonnes, higher than forecast exports tonnage and higher than budgeted export sales.
Export tonnage through its port terminals is expected to between 4.5 million tonnes and five million tonnes for the year.
"The higher than expected export tonnage demonstrates that the removal of the bulk wheat export monopoly has encouraged more competition in the Australian wheat market, and is driving a more robust export program," managing director Mark Irwin said in a statement.
GrainCorp provides port terminal services to more than 10 bulk grain exporters and from the company’s comments, they have been driving more business towards GrainCorp’s facilities..
"While our port earnings have recovered and the result is pleasing, they need to be looked at in the context that the earnings boost in fiscal 2009 follows two years of low export tonnage and association terminal operation losses.
"The prospects for another good winter grain harvest remain, with crops having been established in ideal conditions in most areas, but finishing rain across the grain belt is needed."
In fiscal 2008, GrainCorp made a net loss of $19.94 million, due to drought conditions in Queensland, New South Wales and Victoria.
The new guidance released yesterday was in fact GrainCorp’s second upgrade of its earnings outlook since it forecast a profit between $23 million and $28 million in February.
It lifted that estimate to between $37 million and $42 million in May as the solid harvest was confirmed.
GrainCorp said its grain receivals were boosted by post harvest deliveries to its site of more than one million tonnes, which indicated significant movement of grain from on-farm storage into the GrainCorp network.
This had been driven by demand from the new bulk wheat exporters.
The company said that earnings from the provision of port terminal services has also been boosted by significantly higher than average sorghum export volumes through its terminals at Mackay, Gladstone, Fisherman Island in Queensland and Carrington in NSW, following two sorghum crops that were significantly above average.
