Drought hits GrainCorp, crop insurance reduces impact
GrainCorp has suffered a net loss from normal operations, but it could have been worse. See how here.
A $47 million payment to GrainCorp under its crop insurance program has softened the blow from a third consecutive drought year for the east coast grain marketer and bulk handler.
GrainCorp has reported an underlying net loss from its continuing operations of $16 million for the 12 months to September 30 this year — a stark contrast to the $158 million loss for the previous season.
But after the profits from the spin-off of its highly profitable United Malt Holdings malting division is taken into account, the company recorded a $343 million net profit after tax.
GrainCorp managing director Robert Spurway said it was a substantially improved performance for the company after three years of drought.
“We are delivering on our operational initiatives and these are providing more consistent and stable earnings for the business,” Mr Spurway said.
“The most significant drivers in the year were the positive impact from the Crop Production Contract (crop insurance program), improved performance from our east coast of Australian grains and international trading businesses, and strong oilseed crush volumes and margins.
“Out company as a strong balance sheet and is in a privileged position with a high quality, integrated network of infrastructure assets to receive and export the much larger crop currently in harvest across the east coast of Australia.”
The CPC was negotiated last year with crop production insurer White Rock.
In good harvests, GrainCorp makes a payment to White Rock, while in droughts, it receives payments from the insurer.
If east coast grain receivals are 15.3 million tonnes or less, GrainCorp receives a production payment of up to a maximum of $80 million.
If the harvest is more than 19.3 million tonnes, GrainCorp pays a production payment up to a maximum of $70 million.
This year’s payment was $58 million, but after deductions, this reduced to $47 million.
GrainCorp said it would pay a seven cents a share dividend, fully franked.
It will be paid on December 10 on shares held at November 26.
It is the first dividend in two years.
MORE
‘We never dreamt it would turn into this sort of business’
An almost 30-year journey has seen Cobram Estate evolve into Australia’s leading producer of extra virgin olive oil. See their story.
Capitalising on the ‘beautiful food bowl’ of South Gippsland
No chemicals. No outside soil. No worries. This is the approach taken by Chippin Estate’s Shane O’Keefe at his bountiful vegetable farm.