GrainCorp Reports Preliminary 1H24 Results and Softening Outlook for FY24

Highlights:

• GrainCorp expects to report a decline in underlying EBITDA and NPAT for 1H24 compared to the same period last year, reflecting market normalization following exceptional industry performance in previous years.
• Despite meeting expectations for 1H24, GrainCorp anticipates softened operating conditions in the second half of FY24, leading to a revised full-year guidance range for underlying EBITDA and NPAT.
• Factors influencing the softened outlook include global supply dynamics impacting grain and oilseed prices, reduced grain production in Western Australia due to dry conditions, and operational downtime at a food manufacturing site in West Footscray.

GrainCorp Limited (ASX: GNC), a prominent player in the grain and edible oils industry, has released its preliminary results for the first half of fiscal year 2024 (1H24) and provided an update on its trading outlook. The company anticipates reporting an underlying EBITDA of AU$164 million for 1H24, a decline from AU$383 million in the same period last year. Similarly, underlying Net Profit After Tax (NPAT) is expected to stand at AU$57 million, down from AU$200 million in 1H23, subject to finalization and audit review.

Resilience Amidst Normalization

GrainCorp's Managing Director & CEO, Robert Spurway, highlighted the company's resilience in the face of market normalization following three exceptional years for the industry. He attributed the decline in volumes handled across East Coast Australia (ECA) and lower margins to anticipated market adjustments. While Southern NSW and Victoria recorded strong volumes, below-average conditions in Queensland and Northern NSW offset these gains.

Softened Outlook for FY24

Despite meeting expectations for 1H24, GrainCorp noted softened operating conditions leading into the second half of the fiscal year. Weak margins and volumes in April 2024 indicate a challenging outlook. Consequently, the company revised its full-year guidance, expecting underlying EBITDA in the range of AU$250-280 million and underlying NPAT of $60-80 million, compared to the previously disclosed ranges of AU$270-310 million and AU$65-95 million, respectively.

Factors Influencing Outlook

Several factors contribute to the adjusted guidance, including global supply dynamics impacting grain and oilseed prices, reduced grain production in Western Australia due to dry conditions, and operational downtime at a food manufacturing site in West Footscray. Despite these challenges, GrainCorp remains focused on optimizing its integrated supply chain and diversifying its business through initiatives such as bulk materials handling and expansion in animal nutrition and agri-energy sectors.

Looking Ahead

GrainCorp's outlook for FY24 remains subject to various variables, including grain volumes in the second half of the year, timing and volume of grain exports, supply chain and oilseed crush margins, and new season opportunities in Q4. The company is closely monitoring these factors to navigate the evolving market landscape effectively.

This announcement is authorized by the GrainCorp Board, reaffirming the company's commitment to transparency and accountability in its communications with stakeholders.

About GrainCorp

With a century-long history, GrainCorp is a leading integrated grain and edible oils business in Australia and New Zealand. It boasts a robust global supply chain comprising high-quality infrastructure assets for storing, processing, and transporting grains and edible oils, positioning itself as a key player in the agricultural industry.

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