GrainCorp swings to hefty net profit, eyes better conditions ahead
ASX-listed agribusiness heavyweight GrainCorp has delivered a $388 million statutory net profit, lifted substantially by the $333 million sale of its bulk liquid terminals business.
GrainCorp, a bulk handler and trader of grain, swung to an underlying net profit of $55 million, a significant turnaround on the prior corresponding period's $48 million net loss.
GrainCorp's results were also boosted by a new crop production contract it recently negotiated, with this delivering a $45 million net gain.Credit:Bloomberg
GrainCorp chief executive Robert Spurway said the business was well placed after the recent demerger of its malt operations into a separate ASX-listed business, adding that all business segments had delivered a significantly better performance on the first half of last year.
"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," he said.
GrainCorp delivered full year revenue of $1.96 billion, which was just underneath market expectations, according to Bloomberg, of $2 billion.
GrainCorp's results were also boosted by a new crop production contract it recently negotiated, with this delivering a $45 million net gain. The contract delivers a payment to GrainCorp in poor grain seasons when the grain crop plunges below set benchmarks.
The agribusiness heavyweight, which has a market capitalisation of about $750 million, said it was maintaining a disciplined approach to capital management and forecast total capital expenditure for the 2020 financial year of between $35 million and $45 million. GrainCorp will not pay an interim dividend.
GrainCorp recently won shareholder and court approval to demerge its malt operations to form the company United Malt. GrainCorp's 10 per cent minority interest in United Malt was valued at $112 million at the end of March.
GrainCorp shares closed down 1.2 per cent on Wednesday at $3.29.