(Australian Associated Press)
Agribusiness GrainCorp has flagged a stronger year ahead due to a larger crop and operational efficiencies achieved in its storage and logistics business over the past two years.
The company’s profit in the year to September 30 dropped four per cent from the previous year to $30.9 million, while underlying profit rose 18 per cent to $52.7 million, in line with the company’s guidance.
Australia’s biggest grains handler now hopes to benefit from a larger crop in the current fiscal year, with 1.5 million tonnes of grain already received.
“We think it will be a much better year for us than 2016 was,” managing director Mark Palmquist said, though he did not provide specific financial guidance.
“While this year’s larger crop is welcome, harvest is at least three weeks late this year and there is a long way to go before it is all stripped and in the bin,” he cautioned.
Mr Palmquist expects conditions in the grains marketing business to remain challenging, as a global oversupply of grain, strong competition and lower demand for produce from Australia’s east coast weigh on prospects.
GrainCorp’s storage, logistics and marketing businesses have contracted in recent years, while its malt business has grown due to rising demand for whisky and craft beer.
The malt business is likely to build further on its strong performance, helped by an expansion at its Pocatello facilities in the US and continuing demand growth in America and overseas markets.
GrainCorp is the world’s fourth largest commercial malts producer, supplying brewers and distillers globally. The division contributes the bulk of the group’s earnings.
The company expects improved margins in its edible oil business, helped by a larger Australian canola crop and expansion projects.
GrainCorp shares dropped two cents to $8.58.
SMALLER CROP DENTS GRAINCORP’S PROFIT
* Net profit down 3.7pct to $30.9m
* Revenue up 1.8pct to $4.16b
* Final dividend up 1 cent to of 3.5 cents, fully franked