Dry bites as GrainCorp profit drops

A DROUGHT-RAVAGED east coast cropping landscape has shrivelled GrainCorp’s balance sheet, with the bulk grain shipper and handler’s full-year profit dropping 43.7 per cent to $70.5 million.

Revenue was down $322 million, or 7 per cent, from $4.575 billion to $4.253 billion, in the year to September 30, with a rise in malt and oil revenue failing to offset a $380 million drop in grain earnings, the company announced yesterday.

Earlier this month, GrainCorp cut about 50 jobs in middle management and administration on forecasts of a severely reduced summer harvest, with further cuts expected as a bleak 2019 looms.

“The 2019 financial year will be extremely challenging for GrainCorp with expectations of a substantially smaller (East Coast) crop due to the current drought,” chief executive Mark Palmquist said in a release. “In response to the constrained grain availability, the grains business is focusing on network rationalisation, cost reduction and domestic trans shipments, i.e. grain imports from Western Australia and South Australia.”

Total grain sales were down 1.4 million tonnes, or 16.9 per cent, to 6.9 million tonnes, with grains revenue dropping $380 million to $2.24 billion.

There was, however, a craft beer-driven rise in GrainCorp malt revenue, which was up $47 million to $1.15 billion.

Edible oils revenue was also higher, rising $24 million to $969 million.