A 30,000 tonne-per-site increase in grain receivals drove GrainCorp’s pre-tax profits up more than $100 million in the first half, leading to its largest single-day stock market improvement in almost five years.
GrainCorp closed at $9.88 a share on the ASX on May 11, up 8.3%.
Improved efficiency in the grain company’s network, including consolidation of some sites, led to an average of 70,000 tonnes received at each GrainCorp site in the first half, up from 40,000 tonnes per site a year ago.
The company reported half year revenues of $2.46 billion (up 18.7%), EBITDA of $236 million (up 77.3%) and net profit before tax of $129 million (up 345.9%).
Managing director Mark Palmquist said the result benefitted from a large Australian grain harvest and higher export volumes, combined with an “intense” network efficiency improvement program, and sound cost management.
“Our Storage and Logistics team performed very well in response to the significant challenges of the record harvest and compressed export program,” he said. “This has been achieved through our strategy of developing a modern, efficient network…”
Palmquist conceded a lengthy industrial dispute between unions and Pacific National was continuing to affect GrainCorp’s supply chain in Victoria.
But his overall outlook for the business was positive.
“GrainCorp is currently in a very favourable strategic position,” he observed.
“Our program of major capital works projects is largely due for completion over the next 12 months and we will enjoy the benefits in coming periods.
“In addition, strong volumes and cashflow, combined with the sale of Allied Mills and a German malt house, provides balance sheet flexibility that will allow us to consider growth options in line with our strategic priorities.”
Cunningar upgrade on track
GrainCorp also announced it was roughly a quarter of the way through its $8.1 million upgrade at its Cunningar, in south-central-NSW.
The upgrade is jointly funded by GrainCorp, the Australian Government, and the local Hilltops Council.
“Most of the preliminary earth works have been completed and we are transitioning to the construction of the rail sidings and overhead rail bins,” GrainCorp regional manager Sarah Roche said.
“Fabrication of the steelwork and silos is in full swing, trusses for conveyors have already been delivered to site and piling for footings is underway.”