GrainCorp reports record earnings

Two consecutive bumper harvests have led to GrainCorp’s biggest ever earnings report. See the results.

Two consecutive bumper harvests have led to GrainCorp’s biggest ever earnings report.

The bulk handler and marketer released its full-year results and forecasting strong results for the 2022-23 harvest despite widespread flooding.

“We have made the most of the opportunities that have been there, and the strong demand for Australian grain around the world,” GrainCorp managing director Robert Spurway said.

Underlying earnings before interest, taxation, depreciation and amortisation was $703 million, more than double the $331 EBITDA for the previous year, which was considered “exceptional”.

Underlying net profit after tax this year was $380 million, up from $139 million in 2020-21 and a huge turnaround from the $16 million loss in 2019-20.

“We’ve benefited from the second consecutive bumper crop on the east coast of Australia. “We’ve delivered strong supply chain performance and demonstrated resilience in a year of many challenges for others,” Mr Spurway said.

GrainCorp handled 41.1 million tonnes of grain in FY22, up from 34.4 million tonnes in FY21.

The company will pay shareholders a fully-franked 30 cents a share dividend, with total dividends of $121 million in FY22. It completed a $50 million share buyback in July.

GrainCorp chief executive Robert Spurway.

Mr Spurway said the 2022-23 harvest would be “quite extended”, with yield and quality downgrades as a result of widespread heavy rain and flooding across the east coast.

“A number of weeks of dry weather will certainly improve the situation for many … Ongoing wet weather will only make it harder for some of those that have already suffered flooding.

“But if we look across the more than 6 million hectares planted on the east coast of Australia, as devastating as the floods are, for those that have low lying areas, there are plenty of traditionally dry areas or undulating country where the crops are looking pretty strong,” he said.

For the bulk handler, the overall volume of grain would be a bigger driver of earnings than the grain quality in FY23.

“(Quality) doesn’t have any direct impact on us, because the cost is borne by the grower or the customer, and pleasingly on an ongoing basis there’s very strong demand for feed grades,” Mr Spurway said.

Despite flooding, the company has already received 1.1 million tonnes of grain into its network, mainly in Queensland and northern NSW. By this time last year, the company had received about 2.5 million tonnes of grain.

GrainCorp’s share price fell 39 cents in morning trading on Wednesday to $7.82 a share.

GrainCorp reported record earnings in FY22.

Meanwhile, agricultural chemical company Nufarm Limited today also announced a strong increase in full year earnings, as a result of “favourable seasonal conditions and attractive soft commodity prices”.

Nufarm reported underlying earnings before interest, tax, depreciation, amortisation and material items of $447 million, up from $361 million in FY21.