GrainCorp prepared itself for mouse plague

Agriculture heavyweight knew the mouse plague that’s giving farmers nightmares was likely and had its defences prepared.

The mouse outbreak has hit grain crops throughout much of regional Australia, this year from the Darling Downs of Queensland through New South Wales and Victoria. Picture: Trent Perrett

Listed agribusiness GrainCorp last year bolstered its defences against a possible mouse plague as the drought broke across the east coast, helping it to protect bumper harvest.

The Australian processor, storer, and wholesaler of grains and oilseed said it had prepared its silos in the face of the impending mice explosion.

Chief executive Robert Spurway said the business had put in place fumigation and quality controls measures early on that helped it beat back the worst of the rodent tide.

“One of the advantages of our bulk handling operations is we’re able to protect against these challenges in a very confident way,” he said.

“We were not at all surprised by the mice in plague proportions, we were somewhat expecting it after the size of the crop and the sustained drought.”

GrainCorp boosted its full-year guidance on Thursday as bumper growing conditions across Australia’s east coast has pumped up profit.

The earnings lift has allowed the grains marketer to reinstate its interim dividend.

GrainCorp said its underlying earnings before interest, tax, depreciation and amortisation for the half year increased $35m to $140m from the prior comparable period.

The results included a $70m payment made by GrainCorp under the Crop Protection Contract on the back of the strong harvest.

This follows a $58m payment to GrainCorp in the previous year on the back of poor harvests.

Mr Spurway said business was boosted by a larger crop and increased demand.

A picture from Warren in NSW where mice have ruined thousands of dollars’ worth of grain and hay. Picture: Supplied

“Our agribusiness earnings were up substantially, driven by the much larger crop and increased grain volumes in our network,” he said.

“Receival and exports were up materially, supported by strong global demand and pricing for Australian grain and oilseeds.”

Underlying net profit after tax was $51m, a near doubling of last year‘s profit underlying profit of $27m.

Profit from GrainCorp’s processing business were flat lifting only $1m to $24m for the year.

The agribusiness saw the largest jump in profits, increasing $43m in the year.

But core debts have been boosted at the business, climbing to $90m from $37m just last year.

But on a statutory basis net profit fell from $78m to $51m.

The strong showing saw shares in GrainCorp lift as much as 7.6 per cent, before closing up 5.2 per cent at $5.43.

GrainCorp does not publish a breakdown of its exports by country, but Mr Spurway said the moves by China last year to dramatically increase tariffs on barley had seen “limited demand” for the grain.

“We are continuing to trade with China, we’re seeing good demand out of China for a number of commodities we export,” he said.

“I wouldn’t say (exports to China) are up, we’re seeing the benefits of strong demand.”

Mr Spurway said the tightening in global shipping on the back of massive demand for goods was not flowing through to higher shipping costs for GrainCorp.

GrainCorp CEO Robert Spurway. Picture: Supplied

“We’re seeing very good and competitive rates for bulk charter,” he said.

“We have an export program for between 7-8m tonnes and strong ongoing demand into next year. In that respect it’s a really good position to be.”

A fully franked interim dividend of 8c per share was declared. No dividend was paid for the first half last year, although 7c was paid last year.

GrainCorp said it now expected full year EBITDA to be in the $255m-$285m range from $230m-$270m, with underlying net profit after tax in the $80-$105m range compared to the previously forecast $60-$85m.

It expected to handle between 33-34 million tonnes by the end of the financial year.

A strong Summer and Autumn of rain has left good subsoil moisture which is set to boost winter cropping in the coming financial year, GrainCorp said.

Potential export volumes are expected to be crimped due to supply chain constraints.

GrainCorp said it expected to expand its international connections to Ukraine, as delivering on its GrainsConnect Canada business and completing the Fraser Grains Terminal in the coming year.

By 2023-24 GrainCorp said it was intending to revise its international operating model and reform its planning and supply chain performance.