Drought bites into GrainCorp profits

Agribusiness sees returns fall on every line as injuries rise

Drought bites into GrainCorp profits
Mark Palmquist


In the midst of a devastating eastern state drought, GrainCorp financials are feeling the drag while expecting its restructuring to pay dividends down the track.

While annual revenues fell only 7.1 per cent to $4.25 billion, net profit took a beating, down 43.7 per cent to $70.5 million, though this has been expected.

"GrainCorp has reported FY18 earnings at the upper end of its increased guidance range due to continued positive performance from the Malt business and strong contributions from Bulk Liquid Terminals and Grains’ international grain trading book," the company reports.

"The Group result is however down on last year due to the material reduction in eastern Australian grain production and consequent impact on throughput volumes and exports."

Much of the better performed sectors have international components but Grains is terribly exposed locally and conditions are worsening into the new year.

Read how different it was for GrainCorp last year, here

Despite that, work internally is reported to be progressing, a year after its Storage & Logistics and Marketing businesses were combined into a single ‘Grains’ business unit.

This takes in grain receivals, transport, testing, storage of grains and export and import of grain and other bulk commodities, as well as marketing of grain and agricultural products, and the operation of grain pools.

"The integration of our storage, handling and trading businesses is progressing well, and we achieved a higher share of domestic grain trade during the year," MD and CEO Mark Palmquist says.

"Our team is working hard to control costs and to provide ongoing vital services to our domestic customers by reversing our supply chain to bring in grain shipments from Western Australia and South Australia."

He adds that with regard to safety, "despite a relatively stable Recordable Injury Frequency Rate, an increase in the Lost Time Injury Frequency Rate to 4.1 (FY17: 3.0) emphasises the need for a strong focus on safety improvements across the Group".

Grains revenue fell from $2.52 billion to $2.13 billion, for a gross loss of $7.2 million against a gross profit last year of $135.2 million.


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