GrainCorp earned a $31 million net profit in FY16, down just $1 million despite what managing director and chief executive officer Mark Palmquist described as “significant external headwinds”.
The ASX-listed grain handler and marketer announced underlying EBITDA of $256 million, up 8%, and underlying NPAT of $53 million, 18% up year-on-year, but announced the slight decline in statutory (i.e. actual) NPAT.
“Our diversified business model has allowed us to deliver a solid performance in the face of some significant external headwinds,” Palmquist said.
“These challenges have largely affected the grains and oils businesses, however they have been partially offset by another strong performance from GrainCorp Malt.”
A booming craft beer trend appears to have driven that result.
“GrainCorp Malt continues to perform well with strong demand for specialty products delivering high capacity utilisation,” Palmquist reported.
“The business remains well positioned for key customer segments and has made good progress with the expansion of the Pocatello facility and its craft distribution network.”
Palmquist said a smaller crop in eastern Australia had resulted in lower volumes and throughput for the company’s storage and logistics division. Its marketing business was also restricted, he said, by a combination of large global grain inventories, and low ocean freight rates, which impacted Australia’s competitiveness in certain markets.
But he said the company remained on track to improve its underlying performance, through successful execution of strategic capital projects.
“We have successfully delivered many of these projects over the past 12 months,” he reported, “including the new bulk liquid terminal capacity in Brisbane and Project Regeneration rail improvements for our Storage & Logistics network.”
These efficiency gains will pay off, Palmquist believes, with a strong – albeit late-coming – crop forecast in FY17. As of November 15, 2017, the handler had received roughly 1.5 million tonnes of grain into its network.
“While this year’s larger crop is welcome, harvest is at least three weeks late this year and there is a long way to go before it is all stripped and in the bin,” he said.
“We are expecting a return to a stronger year in FY17, driven by larger volumes and the operational efficiencies delivered in Storage & Logistics over the past two years, partially offset by new port competition.”