GrainCorp shares hit a record high on profit upgrade

GrainCorp has lifted its profit outlook on the back of surging demand, sending its shares soaring to an all-time high.

Robert Spurway, the CEO of Graincorp

Shares in GrainCorp hit a record high Friday as the company boosted its profit outlook largely because of market disruptions triggered by the war in Ukraine.

The stock gained 5.75 per cent, o4r 50c, to close at $9.19, after hitting an intra-day record high of $9.46.

The integrated grain and edible oils business, the largest of its kind on Australia’s east coast, lifted its earnings guidance for the current financial year as a result of surging demand for its products.

In a statement to the ASX, GrainCorp forecast that its underlying earnings before interest, tax and other items, or Ebitda, is now expected to reach $590m to $670m. That’s up from its former target of $480m to $540m.

Underlying net profit guidance was also raised to $310m to $370m, up from $235mn to $280m.

Robert Spurway, the CEO of GrainCorp.

Chief Executive Robert Spurway said the company was seeing high global demand for Australian grain and oilseeds, as well as strong supply chain margins for grain exports.

“This has been driven by two consecutive bumper crops in east coast Australia, coupled with supply shortages in the northern hemisphere,’’ Mr Spurway said.

“The conflict in Ukraine and resulting trade disruptions in the Black Sea region have created uncertainty in global grain markets, with buyers looking for alternate sources of supply. This has further increased both the demand for Australian grain and oilseeds and export supply chain margins.”

In a further positive sign, he said recent weather patterns and continued La Nina conditions have provided excellent planting conditions for the 2022 winter crop to date.

That has sustained confidence in grain supplies from Australia and further supported export sales and supply chain margins.

Despite devastating recent floods, Mr Spurway said GrainCorp ports are operating at near capacity.

Fears of global food shortages have been intensified by Russia’s assault on Ukraine, with both countries supplying about a third of the world’s wheat.

As a result, wheat prices have skyrocketed to their highest point in nearly 15 years, forcing consumers to pay more for a range of

Morgans equities analyst Belinda Moore said last month that GrainCorp had entered a “perfect storm” that had flowed through to its already robust profit outlook.

“GrainCorp’s extremely strong FY22 guidance reflects a combination of another bumper crop, well above average carry-in grain of 4.3 million tonnes, outstanding supply chain execution, continued delivery of operating initiatives and high global demand for Australian grain and oilseeds,” Ms Moore wrote in a note to clients.