By Jared Lynch
Australia's biggest agribusiness, GrainCorp, has posted a 32.5 per cent slide in half-year profit amid a "subdued market" and dry weather.
Net profit fell to $20.4 million in the six months to March 31, compared with $30.2 million in the same period the year before.
GrainCorp chief executive Mark Palmquist.Credit: Jessica Hromas
Revenue meanwhile firmed 4.8 per cent to $2.07 billion.
Chief executive Mark Palmquist said the result was credible given challenging market conditions.
"GrainCorp has performed well considering the subdued market and relatively expensive price of eastern Australian grain in global markets for the half," he said.
"In relation to seasonal conditions in eastern Australia, some good sowing rains have been reported in many grain growing areas over the past week or so.
"This follows an extended drier and warmer period in early autumn. While there remains a long way to go, the rains have been very welcome at this point in the production cycle."
The result included $7.2 million in restructuring costs. Underlying net profit was $32 million.
Morgans analyst Belinda Moore, who expected a 12 per cent fall in net profit to $30.5 million, said the first half of the year had been the toughest GrainCorp had experienced in "many years".
She said the company had well below average grain in storage, or carry-in, with 1.6 million tonnes versus 1.9 million tonnes a year earlier, and a lower exportable surplus - "both of which are high margin work" for Graincorp.
"Intense competition for grain in eastern Australia and a larger world grain crop and cheap ocean freight is reducing Australia's export competitiveness and has delayed GNC's export program," Ms Moore wrote in a note to investors.
"The short term outlook for GNC is tough. While the best time to buy GNC is during a poor season in anticipation of improved returns for when an 'average season' returns, until we gain greater clarity on the new season, we think it is too early to build a position given FY17 earnings will also be impacted by low carry-in grain."
The company will pay an interim dividend of 7.5 cents a share on July 15.