So sad for Greenies: We are not starving yet
GrainCorp says it expects its full year net profit to soar by as much as 100 per cent following a bumper crop, defying pandemic-fuelled labour shortages and supply chain disruptions that have plagued Australia’s food bowl.
The profit upgrade made it the best performer on the ASX on Monday, its shares surging by 13 per cent to $8.50 before easing to close at $8.10.
Chief executive Robert Spurway said the company overcame labour shortages and supply chain disruptions from Covid-19 and floods to process the harvest, which “broke multiple site receival records across our network”.
“The biggest challenge in the end for growers was the wet weather and the interrupted harvest from that point of view. Labour supply was certainly a challenge. But from our perspective, we planned for that very early and we were able to get the complement of workers that we needed,” Mr Spurway said.
The company now expects its full-year earnings before interest, tax, depreciation and amortisation to be $480m to $540m. This compares with $331m in 2021.
Meanwhile it has forecast underlying net profit of $235m to $280m versus $139m last year.
Not even VB maker, Asahi, bypassing GrainCorp to secure grain directly from farmers could dull Mr Spurway’s enthusiasm.
“I certainly wouldn’t like to comment but I still enjoy a drink when I can get one, in moderation,” he said.
“Generally, we continue to build a strong relationship with a number of global brewers and maltsters around the world and we’re seeing good demand for high quality malting barley both in Australia and globally.”
Key to the strong earnings forecast are the higher prices Australian grain has attracted, following drought across the northern US and Canada, combined with the threat of a Russian invasion in Ukraine, which threatens the nation’s harvest.
Ukraine harvested 32.4 million tonnes of wheat last year. Meanwhile, Australia’s wheat production is set to hit a record of 34.4 million tonnes this season, 3 per cent higher than the previous record set in the 2020-21 season.