SYDNEY, AUSTRALIA — GrainCorp reported on Nov. 14 statutory net profit after tax of A$141 million for 2013, down from the A$205 million reported in 2012. The statutory net profit includes items relating to the GrainCorp Oils acquisition and integration, as well as response to takeover proposals from Archer Daniels Midland Co. (ADM).
The company reported strong grain volumes with above average grain exports and carry-in of 4.3 million tonnes.
The eastern Australian crop was approximately 17% smaller than the previous year. While grain volumes were still strong, the smaller crop translated into lower receivals of 10.4 million tonnes (FY12: 12.2 million tonnes); lower grain exports of 8.3 million tonnes (FY12: 10.6 million tonnes); and a 17% reduction in grain throughput to 23.8 million tonnes (FY12: 28.5 million tonnes).
Storage & Logistics result is historically strong, however it is lower than last year’s, reflecting a 28% decrease in residual grain in the network at the start of the year than when compared with 12 months prior and, a return to a more ‘normal’ crop size. These factors were partially offset by operational benefits from our strategic initiatives to improve customer service, including faster stackers to improve site turnaround, rail optimization and other measures.
“GrainCorp Marketing’s earnings are likewise reflective of lower grain production volumes, however we are pleased that the business recorded 6.1 million tonnes of grain sales and has successfully deployed its global trading and risk management platform in Australia,” said GrainCorp Chief Executive Officer and Managing Director Alison Watkins.
GrainCorp Oils’ solid performance is ahead of expectations and the integration is proceeding well, she said.
“Our joint venture, Allied Mills, continues to grow its business, completing its new Tennyson mill expansion in Queensland as foreshadowed and improving earnings from its specialty bakery products range,” Watkins said.
She said the current 2013-14 winter harvest was well underway, although conditions had been challenging for many growers.
“Drought conditions in Queensland and Northern NSW have negatively impacted yields in those regions, while recent frosts have affected many areas further south,” Watkins said. “Crops further south still look larger than average, and we are hopeful of favorable weather conditions as headers are in the paddocks over the next few weeks.”
In relation to the outlook for 2014, GrainCorp expects a below average carry-in of 2.3 million tonnes and the potential for Storage & Logistics’ margins to be further impacted by the crop profile, with grain production for the current harvest concentrated in southern NSW and Victoria, where margins are lower and competitive intensity is greater.
“After a couple of big years, GrainCorp’s storage and logistics network must be well prepared for the much tougher period ahead,” Watkins said.
GrainCorp is in the midst of a takeover bid from ADM. The deal has caused controversy in Australia over relinquishing control of a major national company to a U.S.-based entity.
Australian Federal Treasurer Joe Hockey is to decide by Dec. 17 whether to approve the offer.
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