The company said earnings before interest, taxes, depreciation and amortization (EBITDA) was A$134 million, down from A$136 million in the first half of 2015.
“We are pleased to report solid progress on our major capital projects, such as the significant expansion of our Brisbane bulk liquid storage capability,” said Mark Palmquist, managing director and chief executive officer. “These projects will embed improved performance across our businesses as they are brought online. In the immediate term, however, global trading conditions continue to weigh on the Australian grains sector, particularly affecting oilseed crush margins and grain exports from the eastern states.”
The Oils segment EBITDA for the first half of 2016 was A$29 million, down 30.9% from A$42 million in the same period of last year. Oilseeds earnings impacted by weaker global crush margin, tighter supply and increased procurement costs.
“It has been a more challenging half for GrainCorp Oils, which has experienced lower crush margins due to high European demand for canola seed off a smaller crop resulting in tighter supply and higher procurement costs,” Palmquist said. “Ongoing weakness in the New Zealand dairy sector has also affected the feeds and liquid terminals businesses in that country. We expect all these cyclical factors to improve over time. Our new refining and packaging infrastructure delivers significant efficiencies and will commence with a modest contribution to earnings uplift in the second half.”
Storage & Logistics segment for the first half of 2016 had stable earnings from receivals but pressure due to lower carry-in of grain, deferred export volumes and the impact of fixed take-or-pay rail costs with low utilization given deferred export volumes. The segment saw EBITDA of A$28 million, up 3.7% from A$27 million in the same period of last year.
“The result of Storage and Logistics has been affected by lower grain carry and movement to export, compounded by take-or-pay rail costs,” said Palmquist. “The delayed export program from eastern Australia has also reduced port elevations for the half.”
Allied Mills segment’s EBITDA was A$6 million, up from A$4 million in the same period of last year. The segment had improved earnings despite challenging retail market conditions and contributions from value-added product initiatives.
The Malt segment saw EBITDA for the first half of 2016 of A$76 million, up from A$69 million in the same period of last year. Improved barley quality has enabled more efficient malt processing.
“GrainCorp Malt continues to perform well, due to the numerous operational efficiency projects we have been working on for some time now, as well as strong demand for specialty products,” said Palmquist. “The expansion of our Pocatello facility in Idaho is well progressed and we expect it to be operational in mid-calendar year 2017.
“In relation to seasonal conditions in eastern Australia, some good sowing rains have been reported in many grain growing areas over the past week or so. This follows an extended drier and warmer period in early autumn. While there remains a long way to go, the rains have been very welcome at this point in the production cycle.”