SYDNEY, AUSTRALIA — GrainCorp on May 16 posted a 75% decrease in profits in the first half of its current fiscal year as grain production volumes declined.

The company posted a net profit of A$49.6 million ($33.2 million) for the six months ended March 31, down from A$200.3 million in the first half of the previous fiscal year. Revenue fell 26% to A$3.38 billion. Underlying EBITDA was A$164 million, down from A$383 million during the same period in previous year,

“As expected, we have experienced a decline in overall production across East Coast Australia (ECA) and lower supply chain and crush margins relative to (the first half of 2023),” said Robert Spurway, managing director and chief executive officer of GrainCorp. “Strong volumes in Southern NSW and Victoria have been offset by below-average conditions in Queensland and Northern NSW.”

With ECA and Western Australia experiencing volume and margin moderation, earnings before interest, tax, depreciation and amortization (EBITDA) in the company’s Agribusiness segment was A$101 million, down from A$226 million in 1H23.

GrainCorp said export volumes and margins were affected by lower production, particularly in the drier northern regions of ECA. A decrease in volumes and margins in its International business was driven by lower production in Western Australia and an increase in global production, the company said.

The Nutrition and Energy segment also sustained a decline in EBITDA, which fell from A$131 million in the first half of fiscal 2023 to A$76 million in the first half of 2024.

GrainCorp said its processing sites crushed a record amount of canola seed, but improved volumes were offset by moderated crush margins, with a lower supply of canola seed and weaker vegetable oil prices.

In Animal Nutrition, demand for liquid oils and molasses products drove an increase in sales volume.

Agri-energy sales of used cooking oil and tallow were underpinned by strong North American demand, the company said, “as we expanded our customer base, with increased tallow volumes reflecting the elevated slaughter rate in the domestic cattle industry.”

Looking forward, Spurway said GrainCorp is focused on driving value from its integrated supply chain and diversifying its business through initiatives such as bulk materials handling and growth in its Animal Nutrition and Agri-Energy platforms.

“Despite the moderation in industry conditions in FY24, the long-term fundamentals of the agriculture sector remain strong,” Spurway said. “The industry plays a pivotal role in human and animal nutrition, and as a feedstock source for global decarbonization efforts.”

Regarding the 2023-24 winter grains crop, Spurway said: “Early indications are showing recent rainfall and a healthy soil moisture profile have supported a strong planting period in ECA, with northern regions expected to rebound from 2023-24.”