GrainCorp increases profit and earnings forecasts after big grain sales program
A good sales program is expected to boost GrainCorp’s coffers. See how much the bulk handler is anticipating will flow in.
Big demand for grain from last harvest’s huge crop has prompted GrainCorp to boost its financial outlook for the 2021 financial year.
With seven weeks to go before the end of its reporting period, GrainCorp has upgraded its forecast for underlying net profit after tax from its previous estimate of $80-$105 million to $125-$140 million.
Its guidance for underlying earnings before interest, taxation, depreciation and amortisation has now risen from $255-$285 million to $310-$330 million.
Managing director Robert Spurway said the positive outlook was due to heightened demand for Australian grain, particularly with problems emerging with northern hemisphere crops.
“Post-harvest winter receivals and higher summer receivals, coupled with a favourable outlook for the upcoming winter crop, have supported strong export volumes, forward contracted sales and supply chain margins,” Mr Spurway said.
“We’re seeing excellent demand for high quality Australian grain, particularly with recent weather-related crop production challenges in the northern hemisphere and July delivered our biggest month of contracted sales on record.”
GrainCorp expects exports for the year to be at the higher end of its previous guidance of 7-8 million tonnes.
The carry-over of grain into the new season was also anticipated to be at the high end of its previous forecast of 3.5-4.5 million tonnes, largely due to a larger-than-expected summer crop.
GrainCorp’s new EBITDA forecast includes a $70 million payment to White Rock under its crop production contract.
Mr Spurway said the company’s oilseed business continued to perform well.
“Global demand for vegetable oils remains elevated and this is supporting value across our oils portfolio, ensuring high utilisation of our oilseed crush facilities and strong crush margins,” he said.
The company was expecting another big crop this harvest and planning was well under way to increasing storage capacity.
GrainCorp recently announced its was dusting off the cobwebs from previously shut down storages but was expanding capacity at existing sites by one million tonnes.
“We’re hearing reports of good potential in the upcoming crop, based on factors including area planted, subsoil moisture levels, season-to-date rainfall and longer-term weather forecasts,” Mr Spurway said.
GrainCorp will release its full-year results on November 11.
MORE
‘We’ve got to get moving’ on Western District dry sowing
Summer spraying weeds has helped a Western District family to save some moisture and boost yields as they head into a dry start.
‘We are seeing nervousness about the weather and that’s seen prices rise by $20-$25/tonne’
It’s a dry argument when it comes to the lack of rain in southeastern Australia, and it’s flowing onto feed grain prices.