GrainCorp surges on upgraded guidance

GrainCorp shares surged over 12% on Monday after it announced it is expecting to report strong results for the 2022 financial year, bolstered by a “bumper” crop, continued demand for Australian grain, and only minimal disturbance from supply chain issues.

The integrated grain and edible oils business said expects to report FY22 underlying EBITDA in the range of $480–$540 million, up from $331 million in FY21, along withFY22 underlying NPAT of $235–$280 million, up from $139 million in FY21.

The strong outlook reflects the company’s outstanding supply chain execution, continued delivery of operating initiatives, and high global demand for Australian grain and oilseeds.

While Australian growers had faced numerous challenges, including flooding and a wet, interrupted harvest, the company’s operational and processing teams continued to work under heightened COVID-19 restrictions. As a result, GrainCorp experienced minimal supply chain issues and provided over 1.5 million tonnes of additional storage capacity for growers in time for the 21/22 harvest, and broke multiple site receival records across its network.

Graincorp’s combined grain intake across the harvest period totalled 13.7mmt year-to-date, supplemented with a high opening grain inventory position of 4.3mmt. They also expect good summer crop receivals in FY22, which are benefitting from good weather conditions. The company expects to see total receivals of 16.0mmt to 17.0mmt (FY21: 16.5mmt) and exports of 8.5mmt to 9.5mmt (FY21: 7.9mmt) for FY22.

A strong harvest, coupled with supply shortages and adverse weather conditions in the northern hemisphere, is driving solid global demand for Australian grain and oilseeds and strong supply chain margins for grain exports. Ports have been operating at capacity for the last year to export Australian grain and the company expects this to continue well into FY23.

Managing Director and CEO Robert Spurway commented, “GrainCorp delivered an excellent result in FY21, and I am pleased to report that we expect this performance to be further improved in FY22. In addition to a second consecutive bumper crop and the global demand for Australian grain, our strong start to FY22 demonstrates the efficiency of our supply chain and the resilience of our industry.”