‘Difficult year’ hits Graincorp at market
GRAINCORP shares have wilted after the company flagged an underlying full-year loss of up to $90 million thanks to continued drought and “significant” global grain market disruptions.
The bulk grains handler said on Friday its FY19 results would be worse than previously announced, with the $40 million earnings hit predicted in April blowing out to between $60 million and $70 million.
GrainCorp said new crop trading opportunities in Q4 were no longer expected to materialise due to reluctance from international market participants to consider new season contracts.
Shares in the company lost almost 10 per cent of their value at Friday’s open.
“This is an extremely difficult year for GrainCorp due to the significant disruptions we’ve seen in global grain markets, compounded by the drought in eastern Australia,” chairman Mark Palmquist said.
“The extraordinary circumstances in eastern Australia are highlighted by the fact we expect to ship 2.3 million tonnes of grain from South and Western Australia to meet east coast domestic demand.”
GrainCorp withheld an interim dividend in May after it swung to a $59 million halfyear loss.
The company’s share price had slumped more than 9 per cent that month after LongTerm Asset Partners withdrew a $2.38 billion takeover offer.
It said on Friday its 10-year grain production risk contract should reduce volatility in cash flow, as well as better safeguarding earnings in lower production seasons.