GrainCorp eyes sharp profit increase, prepares for chairman transition

by Holly Demaree
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GrainCorp
Mark Palmquist, GrainCorp’s chief executive officer, said the expected result reflected the record eastern Australian crop and continued solid performance from GrainCorp Malt.
 
WEST PERTH, AUSTRALIA — During its general annual meeting on GrainCorp announced the transition of the chairman role with the retirement of Don Taylor, chairman and director, effective May 1. Graham Bradley is expected to be appointed to the GrainCorp board on March 1 and will then assume chairmanship after Taylor’s retirement.

Bradley has had an extensive business career, including as managing director of Perpetual Ltd. and senior roles at Blake Dawson and McKinsey & Company. Bradley retired from the board of Stockland Corp. in October 2016 after 11 years as chairman, and he currently holds non-executive chairman roles at a number of non-listed companies, including Infrastructure NSW, EnergyAustralia Holdings and HSBC Bank Australia.

“GrainCorp is a great Australian success story,” Bradley said. “As a leader in the listed agribusiness sector, it has strong competitive positions and assets in key markets and has significant future growth opportunities. I want to pay tribute to Don Taylor’s formative leadership role in the creation of this strong foundation for future growth. I look forward to working with my new board and executive colleagues to contribute to the future success of the company.”

Taylor has worked within the grain industry for about 39 years and has been with GrainCorp since 2003. In his chairman’s address he spoke of the growth and challenges GrainCorp has overcome since then.

“Our journey of diversification is well known,” Taylor said. “First into international bulk wheat exports, and then we effectively doubled the company’s size with the purchase of our outstanding Malt business in 2009. Three years after that we created Australia’s largest integrated edible oils business through the simultaneous purchases of Gardner Smith Group and Integro Foods. More recently, we have expanded our grain origination footprint through constructing state-of-the-art facilities in Canada with our globally respected partner Zen-Noh; and moved to consolidate and optimize our portfolio through the sale of Allied Mills.”

He believes the process has grown GrainCorp into a major employer and generator of vital economic activity in regional areas of Australasia, North America and Europe.

“It has been a great privilege to have such a long association with Australia’s leading agribusiness,” Taylor said. “GrainCorp is in excellent shape, with world-class assets, strong cash flows and a healthy balance sheet — there is cause for great optimism as we look to the future.”

The meeting also addressed GrainCorp’s guidance for fiscal year 2017.

The company said it expects to report fiscal year 2017 underlying earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of A$385 million to A$425 million (fiscal year 2016: A$256 million) and fiscal year 2017 underlying net profit after tax (NPAT) of A$130 million to A$160 million (fiscal year 2016: $53 million).

Mark Palmquist, GrainCorp’s chief executive officer, said the expected result reflected the record eastern Australian crop and continued solid performance from GrainCorp Malt.

The company also reiterated that fiscal year 2017 guidance is subject to a number of variables, including:
  • the second half of 2017 volumes, (particularly sorghum receivals), direct to port receivals, port elevations;
  • Impact of timing of grain export program and additional freight bookings;
  • Global crush margins impact on edible oils margins;
  • New season opportunities for GrainCorp Marketing in the fourth quarter;
  • Foreign exchange movements;
  • Barley & oilseed procurement.

Results for the first half of fiscal year 2017 will be released on May 11. 

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