Bullish investors react with surging shares demand
GrainCorp has put wind beneath its share-price wings with a bumper forecast increase in annual results.
The agriculture products and logistics firm put its net profit after tax (NPAT) estimate at $125-140 million, a hefty jump from its previous range of $80-105 million.
This saw its share price surge from $5.47 late yesterday afternoon to $6.12 at deadline after briefly hitting $6.29 a couple of times today – a far cry from the five-year low of $2.95 that it plumbed early last year in the midst of the drought.
Managing director and CEO Robert Spurway said current heightened demand for Australian grain has bolstered an outstanding year for the agribusiness segment.
“We are pleased to upgrade our FY21 earnings guidance, which reflects the strong performance of our east coast Australian [ECA] grains business, following the bumper 2020/21 harvest,” Spurway added.
“Post-harvest winter receivals and higher summer receivals, coupled with a favourable outlook for the upcoming winter crop, have supported strong export volumes, forward contracted sales and supply chain margins.
“We’re seeing excellent demand for high quality Australian grain, particularly with recent weather related crop production challenges in the northern hemisphere, and July delivered our biggest month of contracted sales on record..
The Company expects to see total exports for FY21 at the higher end of previous expectations, of 7-8 million metric tonnes, and as a result of higher than expected summer crop receivals, grain carry out at September 30 is also expected to land at the high end of the range, around 3.5-4.5 million tonnes.
“It is also great to see the benefits of our significant capital investment in prior years, and the full delivery of our operating initiatives, flowing through our network,” Spurway said.
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He confirmed GrainCorp is preparing for the upcoming winter harvest with a strong maintenance and capital investment program.
He noted that total FY21 capex was expected to be approximately $55 million, including approximately $50 million of sustaining capex.
He also confirmed that this increase, relative to the Company’s sustaining capex target of $35-45 million, is due to the additional storage capacity and other upgrades to the ECA network being made in preparation for another large crop in FY22.
“We’re hearing reports of good potential in the upcoming crop, based on factors including area planted, sub-soil moisture levels, season-to-date rainfall, and longer-term weather forecasts,” Spurway said.
“Currently, our teams are working to ensure our network is equipped to handle the new crop at the right time, and in the right locations.
“Our supply chain is executing a heavy outload program on road and rail, moving grain carried from the last winter crop harvest either domestically or overseas.
“We are building one million tonnes of new storage capacity in time for harvest and re-opening ‘flex’ sites to accommodate the anticipated demand.
“We’re also recruiting over 3,000 harvest casuals to help manage that demand across 160 up-country sites and ports.”