GrainCorp hopes for good grain season, United Malt Group to raise capital to reduce debt
Profits have improved for both GrainCorp and its demerged malt division, United Malt Group, for the first six months of the financial year.
GRAIN bulk handler and marketer GrainCorp has reported a net profit after tax of $388.3 million for the six months to March 31.
But the extraordinary financial result takes into account profit of $310.5 million from the divestment of its malt division into a separate company, United Malt Group.
GrainCorp’s underlying earnings before interest, depreciation and amortisation were $183 million for the six months, which includes earnings from the malting division prior to the demerger.
Underlying NPAT was $55 million.
GrainCorp chief financial officer Alistair Bell said underlying earnings and NPAT were both positive results compared to the previous corresponding period.
Mr Bell said that was despite a smaller summer crop this year.
The company suffered a loss of $48 million in the first six months of the previous year.
Mr Bell said the board considered paying an interim dividend but opted to review that when the full-year results were announced with “times more certain”.
GrainCorp managing director Robert Spurway said the company had a strong balance sheet, with core debt now zero
The company sold off Australian Bulk Liquid Terminals during the past year.
It maintained a 10-per-cent stake in UMG, now valued at $112 million.
Mr Spurway said it was pleasing to see a significant turnaround in the processing division, a result of better oilseed crushing margins and greater efficiency at its Numurkah oilseed plant.
That accounted for a $23 million in earning during the past six months — a big turnaround from the $2 million loss for the previous corresponding period.
Mr Spurway maintained some optimism for the coming harvest, with good rain falling in southeastern Australia.
“Market conditions have improved considerably, with widespread rainfall across much of eastern Australia providing optimism for a much larger crop later this year,” he said.
“We are well progressed with our harvest readiness, including a large recruitment and training program for seasonal workers.”
Meanwhile, UMG today announced a $140 million capital raising from institutional and sophisticated investors on top of $25 million it hopes to raise from its existing retail shareholders.
It comes as the maltster reported underlying earnings for the six months to March 31 of $71.2 million, slightly lower than the $72.7 million the previous year.
Underlying NPAT was $29.3 million, 2 per cent higher than the $28.7 million reported for the previous corresponding period.
UMG chief executive officer Mark Palmquist said the separation of the malting operation from GrainCorp had progressed well.
“We are implementing our strategy by targeting those high value markets where the long-term outlook for growth remains supportive,” Mr Palmquist said.
“Meanwhile, we remain focused on optimising the capacity utilisation of our plants and driving further efficiencies across our warehouse and distribution network.”
Mr Palmquist said the capital raising was “pre-emptive action to strengthen the balance sheet to increase resilience in the current uncertain environment and provide financial and operational flexibility”.
The maltster’s net debt was $502.6 million on March 31.
GrainCorp’s share price rose 38 cents, or 11.6 per cent, in early trading today to $3.67.
UMG has gone into a trading halt.
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