Harsh drought costs GrainCorp millions

GRAINCORP has posted a full-year underlying loss of $82 million as one of the worst droughts on record in eastern Australian more than halved grain production.

“The past year was an extremely challenging one for GrainCorp, resulting in disappointing financial results for the company, for our people and for our shareholders,” chairman Graham Bradley said in a letter to shareholders yesterday.

The drought cost it $114 million in east coast grain production, receivals and exports and another $15 million under expiring “take-or-pay” rail contracts that meant GrainCorp had to pay rail operators for shipping grain it didn’t ship.

East coast production of GrainCorp’s five core grains — wheat, barley, canola, chickpeas and sorghum — was down 53.9 per cent to 7.7 million metric tonnes. Global trade tensions also disrupted grain trade flows, causing a rapid decline in Western Australia feed wheat and grain prices, costing the company $65 million.

Adding in the $31.3 million net loss GrainCorp incurred responding to an aborted takeover offer from Long-Term Asset Partners and the pending demerger of its international malting business, GrainCorp suffered a statutory loss of $113 million.

GrainCorp had a $71 million profit in FY18. It made $4.85 billion in revenue from continuing operations in the 12 months to September 30, up 14 per cent from a year ago.

GrainCorp said it responded to grain deficits in Queensland and NSW by reversing its port supply chains and transshipping over two million tonnes of grain from other states to satisfy demand.

“Trans-shipments of this size are rare, and this emphasises the severity of the drought and demonstrates our ability to adapt to manage these extreme factors,” GrainCorp chief executive Mark Palmquist said.

These shipments from WA, South Australia and Victoria are expected to continue throughout the financial year.

The GrainCorp board said it wouldn’t pay a final dividend. It also scrapped its interim dividend.