Graincorp slumps to loss as drought conditions bite
Australian-listed agribusiness Graincorp has slumped to a $59 million half year statutory net loss, as farmers battled challenging drought conditions that slashed crop production in eastern Australia.
The Graincorp result is down from a $36 million statutory net profit for the first half of the previous year.
While the major factor behind the loss was severe drought in eastern Australia, the company indicated that its results were also affected by large disruptions to grain trade conditions caused by international trade tensions.
Graincorp said it would not pay a half year dividend as a result of the financial performance.
The bulk grain and oilseeds handler was recently the subject of a $2.4 billion bid from a group known as Long-Term Asset Partners. But LTAP withdrew the bid at the beginning of this week.
"East coast Australian grain production was the lowest in over a decade and this has had a significant unfavourable impact on both our grains and oilseeds businesses," said Graincorp's chief executive Mark Palmquist.
The agribusiness warned that it expected the challenging conditions in eastern Australia to persist in the second half of the financial year.
"Planting for the winter grain crop is well underway in eastern Australia, however it is too early in the season to forecast grain production levels and the potential implications for GrainCorp," the company said in a statement.
Mr Palmquist said the company's malt, feeds and bulk liquid terminals business continued to perform well.
The aborted LTAP bid for Graincorp is far from the only corporate activity surrounding the Graincorp portfolio. In March, Graincorp announced it had agreed to sell its bulk liquids terminals business, its division running huge terminals which store huge quantities of liquids, to the business ANZ Terminals for $350 million.
Mr Palmquist confirmed on Thursday that different parties had expressed an interest in Graincorp, and that those discussions were continuing. However he didn't name the parties, nor enunciate what exactly they were interested in buying.
"We still have a lot of engagement going on with various interested parties," Mr Palmquist said.
And in April the agribusiness unveiled plans to demerge its global malting business. Under the corporate overhaul Graincorp's grains and oils businesses would be combined to form one ASX-listed entity to be known as New Graincorp.
Under the changes, which Graincorp hopes to have completed by the end of this calendar year, Mr Palmquist would be become chief executive of the separated business "MaltCo", while Klaus Pamminger, currently a senior Graincorp executive, would become chief executive of New Graincorp.
More to come