La Nina and the strong local growing season, helped by solid world grain prices, saw Graincorp surprise the market on Monday with a big lift for its 2022 financial year earnings guidance.
The company told the ASX on Monday that it expects 2022 profit to rise by at least 70% compared to last year, citing high global demand for Australian grain and oilseeds.
It is the second upgrade in less than two months from the east Coast grain handler.
Yesterday’s surprise saw the shares leap more than 18% at the open to a high of $8.50 before they eased a touch to end up more than 12% at $8.10. That took the shares back to where they were trading at the start of January.
The company said it would also benefit from optimal weather conditions, which are expected to drive high summer crop receivals after it reported a record winter crop last month.
Graincorp said net profit after tax in fiscal 2022 would come in the range of $235 million to $280 million, compared to $139 million posted in the previous year. Its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) would be in the range of $480 – 540 million (FY21: $331 million), a rise of well over 70%.
The company added that, along with a second consecutive bumper crop and the global demand for Australian grain, “our strong start to FY22 demonstrates the efficiency of our supply chain and the resilience of our industry.”
“Once again, Australian growers faced numerous challenges, including flooding and a wet, interrupted harvest, while our operational and processing teams continued to work under heightened COVID-19 restrictions.
“Notwithstanding, GrainCorp experienced minimal supply chain issues and provided over 1.5 million tonnes of additional storage capacity for growers in time for the 21/22 harvest and broke multiple site receival records across our network.”
“Our combined grain intake across the harvest period has totalled 13.7 million tonnes year-to-date, supplemented with a high opening grain inventory position of 4.3 million tonnes. We also expect good summer crop receivals in FY22, which are benefitting from optimal weather conditions.”
The Company expects to see total receivals of 16 to 17 million tonnes (FY21: 16.5 million tonnes) and exports of 8.5 to 9.5 million tonnes (FY21: 7.9 million tonnes) for FY22.
“The strong harvest, coupled with supply shortages and adverse weather conditions in the northern hemisphere, is driving excellent global demand for Australian grain and oilseeds and strong supply chain margins for grain exports,” CEO Robert Spurway said in Monday’s release.
