As expected GrainCorp has delivered a $388 million statutory interim net profit thanks to the $333 million sale of its bulk liquid terminals business.
Underlying earnings for the company which has been hard hit by the severe drought, were $55 million, a significant turnaround on the $48 million net loss for the first half of 2018-19.
Chief executive Robert Spurway said the business was well placed after the recent demerger of its malt operations into a separate ASX-listed business (United Malt, which reported its first result yesterday), adding that all business segments had delivered a significantly better performance on the first half of last year.”
That message was absorbed by investors and the shares leapt more than 11% to $3.67, despite a weaker wider market
The outlook for the company has improved considerably, with widespread rainfall across much of eastern Australia providing optimism for a much larger crop later this year.
GrainCorp delivered full year revenue of $1.96 billion but despite the better performance and prospects now the drought has eased across much of Eastern and central Australia, it will not pay an interim dividend.
Mr. Spurway said GrainCorp was well placed after the demerger of United Malt, with an improved result from continuing operations and a strong balance sheet with zero core debt.
“Each of our business segments was up substantially on the prior corresponding period, reflecting GrainCorp’s new operating model and the steps we have taken to manage crop variability and maximise our assets.
“Market conditions have improved considerably, with widespread rainfall across much of eastern Australia providing optimism for a much larger crop later this year.
“We are well progressed with our harvest readiness, including a large recruitment and training program for seasonal workers.
“While COVID-19 presents challenges, we are pleased that Food & Agriculture has been classified as an essential service and we have shown resilience through the ongoing crisis by continuing to deliver for our customers.
March 31, GrainCorp had zero core net debt, while GrainCorp’s 10% minority interest in United Malt was valued at $112 million “providing additional balance sheet resources and financial flexibility.”
So far as the rest of the year is concerned, GrainCorp said although the expected summer crop is small, it “is planning for higher grain exports in 2H20 and lower grain trans-shipments to ECA (East Coast Australia) ports as domestic demand is likely to taper with expectations of a stronger crop in FY21.
“Oilseed crush margins are expected to remain favourable in the second half due to prevailing canola oil and meal values.
“Favourable soil moisture levels across large parts of eastern Australia has supported widespread planting for the FY21 crop.”
GrainCorp’s said its ‘harvest readiness’ is underway, including site preparation, a focused maintenance program, equipment relocation between sites, large-scale procurement of tarpaulins and extensive recruitment and training.
