WHILE trading conditions in the first half of the 2024 financial year were largely in line with expectations, handler and marketer GrainCorp is predicting a softer outlook for the second half.
In its half-year trading update released yesterday (6 May) covering the six month to 31 March 2024, GrainCorp said it expects to report 1H24 underlying EBITDA of $164 million (1H23: $383 million) and underlying Net Profit After Tax3 (NPAT) of $57 million (1H23: $200 million), subject to finalisation of the 1H24 financial report and completion of the auditor’s review.
MD & CEO Robert Spurway said the preliminary results displayed resilience as grain and oilseed markets normalised following three outstanding years for the industry. “As expected, we have experienced a decline in overall volumes handled across East Coast Australia and lower end-to-end supply chain and crush margins relative to 1H23,” he said.
“Strong volumes in Southern NSW and Victoria have been offset by below average conditions in Queensland and Northern NSW.”
However, the company reported weaker than expected margins and volumes in April 2024. As a result, GrainCorp expects to report FY24 underlying EBITDA in the range of $250-280 million from the previously disclosed range of $270-310 million (FY23: $565 million) and FY24 underlying NPAT of $60-80 million from the previously disclosed range of $65-95 million (FY23: $200m).
GrainCorp said its updated earnings guidance range reflects continued softness in end-to-end grain handling margins driven by stronger global supply of grain and oilseeds; lower commodity prices and normalisation in global supply chains impacting grower selling behaviour and customer purchasing behaviour; drier than expected conditions in WA, reducing grain production and impacting exportable volumes and margins; and
Costs associated with operational downtime at GrainCorp’s food manufacturing site at West Footscray due to unplanned equipment maintenance.
Mr Spurway said: “Our team has maintained strong discipline despite the shift in industry conditions. We are focused on driving value from our integrated supply chain and continue to diversify the business through initiatives such as bulk materials handling and growth in our animal nutrition and agri-energy platforms, supported by our strong balance sheet.
“The latest news of El Niño abating in Australia is a positive for growers. Recent rainfall across key growing regions, although impacting summer crop volumes and quality, has improved soil moisture profiles, and therefore the prospects for the FY25 winter crop.”
