Smaller crops on horizon
Townsville A BIG harvest and higher export volumes have boosted GrainCorp’s fullyear profit, but the crop in the year ahead is expected to be substantially smaller because of dry weather.
The grains handler and malt producer yesterday posted a net profit of $ 125.2 million for the year to September, up from $ 31 million a year earlier.
Underlying profit, which excludes one- off items, more than doubled to $ 142 million, while revenue was up 10 per cent at $ 4.58 billion.
Chief executive Mark Palmquist said it was a near- record crop in eastern Australia the past year and GrainCorp Malt experienced solid demand from craft beer makers and distillers.
“Across our grains businesses, we benefited from increased storage, handling and merchandising opportunities, aided by the large harvest,” he said.
“We successfully executed a large grain export program despite persistently high global crop supplies and depressed grain prices, which continued to be a headwind for Australian growers.”
But GrainCorp says the crop this financial year is expected to be substantially smaller in eastern Australia.
The company is planning for a decline in receivals following a small harvest in Queensland and northern New South Wales.
Production will be skewed to Victoria and southern NSW, where Graincorp’s market share is traditionally lower.
The company expects grain ports to be well below average.
Mr Palmquist said it would be a challenging year for GrainCorp’s grains business, but the company had made significant progress on improving network efficiency and controlling costs.
Forecasters are predicting a total east coast Australian winter grains ex- crop of 16.2 million tonnes – down from 27.2 million the past year.
GrainCorp said it was too early to estimate the size of the summer crop, but rainfall in October had helped with plantings.
Mr Palmquist also said rising energy costs continued to be a serious challenge for the long- term sustainability of food and malt processing in Australia.
GrainCorp was evaluating various energy efficiency and alternative generation options to mitigate volatile energy prices, he said.
“This is important to remain internationally competitive,” he said.
GrainCorp is paying a fully franked final dividend of 15c a share, up 12.5c from a year ago.
Its results came as official figures revealed the gross value of farm production in Australia has hit a record level.
That tally was $ 63 billion in the year to June, according to the Austra- lian Bureau of Agricultural and Resource Economics and Sciences.
Latest figures available on individual commodities, for the 2015- 16 year, show cotton is Australia’s most profitable crop based on the amount of money it fetches for each tonne produced.
But sugar cane produces the highest yield for each hectare.
Beef and veal top the gross value production charts at $ 13.1 billion, with wheat second at $ 6.2 billion.
Wheat’s overall value almost outstripped the next best crop, barley, three times.
Agriculture accounted for 15 per cent of Australia’s total exports in 2015- 16, with China, the US, Japan, South Korea and Indonesia the top five destinations.
In horticulture, grapes had highest gross value of production.
Almonds were the most profitable in the sector, while potatoes had the highest yield. the