The drought savaged the 2018-19 result of GrainCorp, sending it to a loss of $113 million and forcing the company to axe its final dividend.
The company said grain growers in the eastern states who used its services were hit by one of the “worst droughts on record”.
And it warned that there will be no relief from the current harvest that has now started on the east coast.
As a result, there’s no final after a 16 cents a share was made in 2017-18. No interim was paid for the year.
Revenue rose 14% to $4.849 billion.
Stripping out one-off items company recorded underlying EBITDA (earnings before interest, tax, depreciation, and amortisation of $69 million), more than 70% below last year’s total of $269 million.
GrainCorp CEO Mark Palmquist said the company had shipped more than two million tonnes of grain from other grain-growing states including Western Australia, to meet the demand for grain on the east coast. NSW and Queensland had large grain deficits because of the big dry.
“Our grains business was also negatively impacted by unexpected disruptions to international grain trade flows and Australian grain markets, which caused a rapid and material decline in feed grain values and, in turn, adversely affected our positions,” he said.
GrainCorp said its Malt business had had “a good year with increased malt sales in the second half and continued solid demand from its craft beer and distilling customers.”
“GrainCorp progressed its malt capacity expansion projects in Scotland, including an upgrade of Bairds Malt’s Arbroath facility and construction of a new malting plant at Inverness. The expansion will bring Bairds’ total annual capacity to over 300,000 tonnes.”
In its Oils business, the company said oilseed “crush margins continued to be adversely affected by the ongoing drought and the resulting impact on canola supply and cost.”
“The Bulk Liquid Terminals and Feeds businesses both performed well, with Terminals maintaining a high utilisation and Feeds benefiting from strong demand for supplementary feed. Foods delivered a stable result with improved plant performance.”
GrainCorp said the current harvest in Eastern Australia would be significantly below average. The grain harvest in South Australia and Western Australia is also expected to be below average because of drier weather.
“The company expects low levels of grain carry-in in eastern Australia and a continuation of supply deficits in certain regions in eastern Australia due to the drought. To help satisfy demand for grain in these regions, GrainCorp expects further grain trans-shipments from Western Australia, South Australia, and Victoria throughout FY20,” directors warned yesterday.
GrainCorp says it still plans to demerge its malting business from its grain operations, a move that will form two separate ASX-listed companies.
GrainCorp shares rose 4% to $7.73 with the poor result well guided by the company during the year and no shocks in the final report yesterday.