Graincorp says big dry will hurt earnings
The big dry in Queensland and northern NSW has significantly reduced the harvest in eastern Australia and will hit earnings, grains marketer GrainCorp has warned.
GrainCorp chief executive Mark Palmquist said on Thursday the 2017/18 eastern Australian winter crop is significantly below the long-term average.
He said summer crop expectations have deteriorated in recent weeks due to prolonged hot and dry weather in Queensland and northern NSW.
"Significantly lower grain stocks across the eastern seaboard means a large portion of the crop will remain in Australia, either on-farm or secured by domestic customers," Mr Palmquist said on Thursday.
He said there is strong demand for grain in some northern areas because of the persistent dry conditions.
"The combination of these factors is currently limiting export opportunities and, as a result, we expect FY18 exports to be 60 to 75 per cent lower than last year," Mr Palmquist said.
GrainCorp expects full-year underlying earnings of between $240 million and $265 million for the full year in fiscal 2018 - down from FY17's $390 million.
The 2017 figure was up 52 per cent on 2016 because GrainCorp benefited from a large east Australian crop.
GrainCorp's underlying net profit for FY18 is expected to be in the range of $50 million to $70 million, down from $142 million.
GrainCorp had warned at the release of its full-year results in November that 2018 would be a challenging year for its grains business because of a substantially smaller crop in eastern Australia, and a below-average exportable surplus.
Mr Palmquist also said on Thursday that GrainCorp was well progressed with integrations of its two grains businesses.
He said GrainCorp's malt business was performing strongly, and the restructuring of the oils business was on track to deliver its targets for the current financial year.
"I am confident that, despite the seasonal challenges, we will deliver solid underlying performance, remain disciplined on managing cash flows and capital expenditure, and are building a stronger and more diversified business," Mr Palmquist said.
Despite the earnings warning, GrainCorp shares were up 29 cents, or four per cent, at $7.63 at 1248 AEDT.
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