GrainCorp surges on guidance upgrade

On Thursday, GrainCorp upgraded its FY21 earnings guidance after confirming that the current heightened demand for Australian grain has bolstered an outstanding year for the agribusiness segment.

The company boosted its range for FY21 Underlying EBITDA to $310-$330 million, up from $255-$285 million, while FY21 Underlying NPAT was increased to $125-$140 million, previously $80-$105 million.

GrainCorp will report its final FY21 results on 11 November 2021. GrainCorp’s upgraded earnings guidance remains subject to several market variables including the timing of grain exports, the strength of the new crop, and prevailing weather conditions.

GrainCorp noted that the increase reflects the strong performance of its east coast Australian grains business, following a bumper 2020/21 harvest. Post-harvest winter receivals and higher summer receivals, coupled with a favourable outlook for the upcoming winter crop, have also supported strong export volumes, forward contracted sales, and supply chain margins.

The company is seeing excellent demand for high-quality Australian grain, particularly with recent weather-related crop production challenges in the northern hemisphere, and July delivered its biggest month of contracted sales on record.

GNC expects to see total exports for FY21 at the higher end of previous expectations announced at 7.0-8.0 million metric tonnes, and as a result of higher than expected summer crop receivals, grain carry out at 30 September 2021 is also expected to land at the high end of 3.5-4.5 million metric tonnes.

The company’s processing business has also continued to perform well as global demand for vegetable oils remains elevated, ensuring high utilisation of oilseed crush facilities and strong crush margins.

GrainCorp also announced that it is preparing for the upcoming winter harvest with a strong maintenance and capital investment program, with FY21 capex expected to be approximately $55 million, including approximately $50 million of sustaining capex.

Managing Director & CEO Robert Spurway commented, “We are pleased to upgrade our FY21 earnings guidance. It is also great to see the benefits of our significant capital investment in prior years, and the full delivery of our operating initiatives, flowing through our network.”