GrainCorp 2020-21 earnings and profit jump after bumper harvest, strong outlook for 2022

GrainCorp had turned its fortunes around. See the healthy profit numbers.

This barley crop near Jung was still a couple of weeks off harvest earlier this week. Picture: MICHAEL WOOD, Rural Logic

Record grain receivals from last harvest has resulted in the earnings and profits of east coast bulk handler and marketer GrainCorp skyrocketing for the year ended September 30, 2021.

Releasing its full-year results today, GrainCorp managing director Robert Spurway said it was an “exceptional result”.

Mr Spurway said underlying earnings before interest, taxation, depreciation and amortisation was $331 million — at the upper level of the $310 million to $330 million guidance released in August.

That compared with a $108 million loss for the previous year, which was affected by drought.

Underlying net profit after tax this year was $139 million, a huge turnaround from the $16 million loss in 2019-20.

“GrainCorp delivered an exceptional financial result in FY21, at the top end of the guidance range we provided in August,” Mr Spurway said.

“Both our agribusiness and processing business segments performed extremely well, driven by supply chain execution and supported by strong demand for Australia grain, oilseeds and vegetable oils.”

GrainCorp will pay a fully-franked 10 cents a share dividend on December 9 for shares held on November 24.

That takes the total dividend for the full year to 18 cents a share.

Dividend payments for the year amounted to 29.6 per cent of NPAT, well below GrainCorp’s stated payout ration of 50-70 per cent of profit.

But Mr Spurway also announced GrainCorp would spend $50 million on a share buyback in February through the Australian Securities Exchange.

He said the dividend and buyback expenditure was a payout of 65 per cent of NPAT.

GrainCorp’s share price fell 23.5 cents in morning trading today to $6.455 a share, or 3.5 per cent.

Mr Spurway said he had “strong confidence” in the outlook for this season’s grain crops, despite the wet start to November and a wetter than average summer forecast.

He said while some growers in northern NSW were “nervous” about the impact of falls over 100mm in some areas over the past week, he didn’t expect the rain to affect harvest volumes.

“It’s really too early to be concerned about rain,” he said.

“In northern NSW, there will be a few growers are a little nervous about the impact it has on their wheat crop.

“However, things can change very quickly, and we expect it will dry out and they’ll accelerate the harvest at that point.”

In central and southern NSW and Victoria, crops were still green and were at least a week away from harvest, so the rain was “unlikely to affect” them, while harvest in Queensland was “largely complete”, Mr Spurway said.

He said the rain had caused “a few delays over the last few days”, but the company expected to see grain deliveries “accelerate quickly” in the next few weeks in NSW and Victoria.

The “silver lining” from the rain was that it would increase soil moisture for summer crops and next year’s winter crop, he said.

The company announced it had received 2.5 million tonnes of grain as of Thursday morning and expected to bring in a “well above average crop”.

The company came into the 2021-22 financial year with a “very significant carry out” of 4.3 million metric tonnes from last year’s bumper crop, and has exported “just under a million tonnes” in the 2022 financial year to date, Mr Spurway said.

Commodity prices remained high and suggested there was “greater demand versus supply for some grades of milling wheat” and “plenty of demand for all grades of wheat and barley, including feed grades”, he said.