Shares in grain exporter and bulk handler GrainCorp jumped more than 10% at one stage yesterday after it reported a 66% surge in half year profit to $88 million.
The shares peaked at $8.60, a 52 week high, before closing up 8% at $8.38.
It was the highest price and close for the shares for nearly three years.
The last time they were around this level was in June 2008.
The result confirms that rural Australia is bouncing back sharply from the long drought. The results of Ruralco and positive outlook from earlier in this week also provide confirmation of the strong recovery underway in the rural sector.
But it wasn’t just the soaring profit: interest dividend was lifted, with a special payment to be made, and the company lifted full year guidance as well.
GrainCorp told the ASX that wheat receivals, its core business, had doubled so far in 2011 to 14.4 million tonnes.
In turn that has boosted revenues by a massive $430 million to $1.34 billion.
As a result after tax interim earnings rose $35 million and the company is now expecting full year profit to be up $30 million to the range of $145 to $165 million.
Guidance for full year Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) jumped to between $310 and $340 million, from $275 to $310 million.
That implies second half EBITDA of $137 million to $167 million versus $100 million for the second half of the 2010 financial year.
GrainCorp shareholders will receive a 15c dividend per share, along with 5c special dividend.
That compares with a 7.27c a share dividend for the first half of 2010.
So in effect the interim payment has been almost tripled.
GrainCrop chief executive Alison Watkins said in yesterday’s statement that it was a good result.
"Earnings from grain handling and marketing were all higher due to the record eastern Australian winter crop harvest, high grain receivals, an increase in the tonnage of grain marketed, and improved productivity," she said.
“Malt business earnings were marginally lower in a challenging environment characterised by unfavourable foreign exchange rates (high Australian and Canadian dollars) and continued soft beer demand in mature markets.”
Graincorp said outlook for its grain storage unit was positive, with strong growth expected in the second half, but flat demand and the high Australian dollar would cut margins in its malt business.
“Second half earnings from grain handling will be supported by the significant carry forward of grain in our country elevators.
"This means earnings from storage will be higher than the previous half year.
"Significant revenue will be generated from handling this grain for both export and domestic customers in the second half.
“We expect grain exports to continue to be strong as exporters seek to deliver grain to customers in the lead up to the new season,” Ms Watkins said.
On the company’s malt business, malt front, Ms Watkins said, “Our new malt house at Pinkenba (Brisbane, Queensland) is close to commercial production. Malt from Pinkenba will replace production from the Toowoomba malt house which will close mid-year.
“We expect foreign exchange rates challenges and flat demand in mature beer markets to continue in the short term, and as a result, we expect malt margins to soften into financial year 2012.”
Looking to the coming season, she said "planting of the 2011/12 eastern states cereal, pulse and oilseed crop is well underway, with farmers taking advantage of good subsoil moisture.
"Australian Crop Forecasters are predicting an eastern Australian wheat, barley and canola crop of 19 million tonnes; 3 million tonnes lower than the prior corresponding period, but well above the long term average.
“While crop conditions are looking promising in most regions, favourable planting and growing conditions are needed to ensure good germination and a strong harvest outlook."
New CEO
at Perpetual, Chris Ryan has taken the familiar route of most new bosses in getting out the axe and hacking and slashing at what his predecessors left behind.
Yesterday Perpetual held a briefing on the new strategy adopted by the CEO. The end result is job losses, talk about cost savings and the usual stuff associated with a change at the top of a major company.
In this case the strategy, outlined in a five page release to the market, won guarded support with the shares up nearly 1.4% to $28.18, a rise on the day of 38c. The wider market was up 1.7%.
So 128 jobs are going and its private wealth platform is for sale.
The majority of job cuts were made this week across all of Perpetual’s business units, with some managers being chopped, according to comments from Mr Ryan at the briefing.
But a total of 26 new jobs have been created in growth areas and the net savings will be around $9 million before tax from 2011-12.
Mr Ryan took over the CEO reins from David Deverall on February 14.
He briefed the market on th
