GrainCorp has reported a profit after tax of $388 million for the half year ended 31 March 2020 following the sale of the Australian Bulk Liquid Terminal business and the successful demerger of United Malt.
The company’s underlying earnings before interest, taxes, depreciation, and amortisation was reported to be $183 million and underlying net profits after tax were $55 million, which are both substantially higher than the prior corresponding period.
The company has also revised its capital structure to ensure minimal core debt, At 31 March 2020, GrainCorp had zero core net debt, which is consistent with its Portfolio Review objective.
GrainCorp’s 10 per cent minority interest in United Malt was valued at $112 million at 31 March 2020.
GrainCorp Managing Director and CEO, Robert Spurway, said the company was well placed after the demerger of United Malt, with an improved result from continuing operations and strong balance sheet with zero core debt.
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“Each of our business segments was up substantially on the prior corresponding period, reflecting GrainCorp’s new operating model and the steps we have taken to manage crop variability and maximise our assets,” he said.
“Market conditions have improved considerably, with widespread rainfall across much of eastern Australia providing optimism for a much larger crop later this year. We are well progressed with our harvest readiness, including a large recruitment and training program for seasonal workers.
“While COVID-19 presents challenges, we are pleased that Food and Agriculture has been classified an essential service and we have shown resilience through the ongoing crisis by continuing to deliver for our customers.”
Graincorp Group CFO Alistair Bell said the Agribusiness segment performed well, notwithstanding a third year of drought in eastern Australia.
“With deficits in eastern Australia, we continued to trans-ship grain from inter-state to meet domestic demand,” Bell said.
“Agribusiness benefited from its new more flexible rail contracts and the first year of the Crop Production Contract, which included a $45 million net gain. In addition, there was no repeat of the negative impact from last year’s disrupted grain trade flows and the Feeds, Fats & Oils businesses performed well with strong demand.
“It was pleasing to see the significant turnaround in Processing, a result of improved oilseed crush margins and greater plant efficiency.”
GrainCorp is planning for higher grain exports in the second half of 2020 and lower grain trans-shipments to East Coast Australia ports, as the company believes domestic demand is likely to taper with expectations of a stronger crop in the 2021 financial year.
It also expects oilseed crush margins to remain favourable in the second half due to prevailing canola oil and meal values,
Favourable soil moisture levels across large parts of eastern Australia has supported widespread planting for the 2021 financial year crop. GrainCorp’s ‘harvest readiness’ is underway, including site preparation, a focused maintenance program, equipment relocation between sites, large-scale procurement of tarpaulins and extensive recruitment and training.