GrainCorp signals its intention to pursue growth acquisitions in the year ahead

The country’s largest grain handler, GrainCorp, has once again flagged that acquisitions are on its agenda.

The country’s largest grain handler, GrainCorp, has once again flagged that acquisitions are on its agenda while delivering its full-year result on Thursday.

The company said its business transformation program had created enhanced capability to support the integration of new acquisitions, as the active pursuit of several growth opportunities to increase its volume and improve its product mix were being pursued for the 2025 financial year. It was diversifying non-grain port earnings, and some analysts believe this could result in it embarking on a deal in animal nutrition after it previously made a bid for listed group Ridley.

Another option for GrainCorp could be the Hygain feed business owned by Adamantem Capital that had previously been on the market. It could also embark on opportunities in the agri-energy business, with a focus on renewable diesel through fallow or from crops such as canola. However, it would likely grow this part of the business organically.

Another area to boost earnings for GrainCorp is by optimising its port assets with more non-grain products passing through, with the plan to earn fees from their use.

GrainCorp previously had other products moving directly through its terminals, although this was still the case with fertiliser. While it may line up for Incitec Pivot Fertilisers’ distribution unit, it is not in its strategic wheelhouse and is seen as unlikely.

But it is well positioned for transactions when it finds the right opportunity – it has $337m of core cash on its balance sheet.

The question is whether or not it will move on a target, as the group has a reputation for moving slowly or being highly cautious when it comes to buying.

GrainCorp’s share price fell almost 3 per cent on the back of its results for the year to September 30, as its underlying net profit was up to $77m from $62m and its earnings before interest, tax, depreciation and amortisation increased to $268m from $246m in the prior year.

It told the market the Victoria canola crop was estimated to be about 25 per cent smaller than the previous year and 18 per cent below the five-year average.

Global crop production remained relatively strong, resulting in competitive margin pressure for Australian exports, and a low crush margin environment was expected to continue into next year.

It would provide earnings guidance at its annual general meeting in February.