Australian multinational crop trader and processor GrainCorp has reported strong first half results, as it benefits from the large harvest on the continent. The business trades as Saxon Agriculture in the UK.
The company made a pre-tax profit of Aus$74.4 million on revenues of $2.56 billion in the six months to March 31st 2021, compared to $110.1m and 1.96bn in H1 2020. The prior year figures included significant one-off receipts including $282.0m from the demerger of United Malt (parent to Baird’s Malt and its UK subsidiaries) and $59.0m from the divestment of Australian Bulk Liquid Terminals (ABLT). Core debt stood at $90m on March 31st 2021, up from $37m on September 30th 2020, in line with seasonal working capital requirements.
The latest period also saw GrainCorp contribute $70m payment under the Crop Production Contract (CPC), in line with the large harvest, compared to its receiving a $58m payment through the CPC in H1 2020. Australia’s market analyst ABARES estimates that the 2020/21 east coast winter combinable crop production rose 166% to 31.4million tonnes year-on-year.
“I am pleased to announce a strong first half result and an upgrade to our full year earnings guidance,” says GrainCorp managing director and chief executive Robert Spurway. “This result and the outlook, reflect a positive rebound in growing conditions on the east coast of Australia and the operating initiatives now embedded in our business.
“The CPC payment highlights both the strength of our current operating performance and the effectiveness of the CPC in smoothing cashflows through the crop cycle.
“Agribusiness earnings were up substantially, driven by the much larger crop and increased grain volumes in our network. Receivals and exports were up materially, supported by strong global demand and pricing for Australian grain and oilseeds.
“The Processing business also performed strongly, with high asset utilisation and positive oilseed crush margins. Global demand for vegetable oils remains elevated and this is supporting values across our oils portfolio, including canola oil and used cooking oil (UCO).”