Second big grain crop boosts GrainCorp earnings and profits

Two big harvests have GrainCorp rolling in the dough, with its share price skyrocketing. See the eye-watering numbers.

GrainCorp’s earnings and profits have risen on back of a second bumper harvest in a row. Picture: Zoe Phillips

GrainCorp’s share price has jumped more that 16 per cent in less than an hour of trading as the grain company announced a big jump in profit after the second bumper crop in a row filled its storages.

In its first earnings guidance for the 2021-22 season, GrainCorp said its underlying earnings before interest, taxation, depreciation and amortisation were forecast to land between $480 million and $540 million for the 12 months to September 30 this year, well above the $331 million recorded last season.

Underlying net profit after tax was expected to fall between $225 and $280 million, about double the 2020-21 season’s result of $139 million.

The company was expecting total winter and summer crop receivals to be 16-17 million tonnes, falling short of the record 17.2 million tonnes received in 2010-11.

GrainCorp managing director Robert Spurway said the strong outlook reflected the company’s outstanding supply chain execution, continued delivery of operating initiatives and high global demand for grain and oilseeds.

“It has been great to see the benefits of a strong harvest, not just to our business but to the sector generally,” Mr Spurway said.

“But also very pleasingly, the performance is such that we are making the most of those opportunities.

“Our supply chain is running well; we have delivered the additional capacity to growers in the lead-up to this harvest and that investment is certainly meeting their needs but creating opportunities for GrainCorp.”

GrainCorp had to build more storages prior to harvest to cope with two big seasons in a row.

The company has factored into its earnings forecast a maximum allowable payout to White Rock for the crop production contract designed to smooth out fluctuations in earnings due to seasonal conditions.

Mr Spurway said the final financial results depended on second half grain receivals — including the summer crop — timing and volume of exports, oilseed crush margins, supply chain margins and new season opportunities.

GrainCorp’s share price jumped 16 per cent in early trading on the Australian Securities Exchange to $8.50 a share but has now dropped back to $8.15, or 13.5 per cent of Friday’s close.

That was despite the ASX All Ordinaries Index falling by 0.3 per cent by noon.

GrainCorp will hold its annual general meeting Thursday next week.