SYDNEY, AUSTRALIA — The demerger of United Malt, the sale of Australian Bulk Liquid Terminals and improved market conditions buoyed GrainCorp’s first-half 2020 results.
GrainCorp’s earnings before interest, tax, depreciation and amortization (EBITDA) for the half-year ended March 31, 2020, were A$183 million, up from A$27 million in fiscal 2019.
“Each of our business segments was up substantially on the prior corresponding period, reflecting GrainCorp’s new operating model and the steps we have taken to manage crop variability and minimize our assets,” said Robert Spurway, managing director and chief executive officer of GrainCorp. “Market conditions have improved considerably, with widespread rainfall across much of Eastern Australia providing optimism for a much larger crop this year. We are well progressed with our harvest readiness, including a large recruitment and training program for seasonal workers.”
Despite enduring another year of drought, Alistair Bell, chief financial officer of GrainCorp, said the Agribusiness segment performed well.
“With deficits in eastern Australia, we continued to trans-ship grain from inter-state to meet domestic demand,” Bell said. “Agribusiness benefited from its new more flexible rail contracts and the first year of the Crop Production Contract, which included a A$45 million net gain.
“In addition, there was no repeat of the negative impact from last year’s disrupted grain trade flows and the Feeds, Fats & Oils businesses performed well with strong demand.”
A positive turnaround in Processing was achieved by improved oilseed crush margins and plant efficiency, Bell said.
During the period, GrainCorp revised its capital structure, and as of March 31 the company had a zero core net debt. GrainCorp also retained a 10% minority interest in United Malt following the demerger, valued at A$112 million, which provided additional balance sheet resources and financial flexibility.
GrainCorp remains aware of the continuing coronavirus (COVID-19) pandemic and is working to keep supply chains open and employees safe.
“While COVID-19 presents challenges, we are pleased that Food & Agriculture has been classified an essential service and we have shown resilience through the ongoing crisis by continuing to deliver for our customers,” Spurway said. “GrainCorp is playing a critical role supporting the food and grain supply chain, while protecting the health and well-being of our people and our communities.”
Looking forward, GrainCorp does anticipate a smaller summer crop but is preparing for increased grain exports in the second half of 2020. The company also expects positive oilseed crush margins as the canola oil and meal value remains steady.
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