Official agricultural forecaster, ABARES, has upgraded the winter crop outlook for Australia’s east coast to 24.4mt. UBS highlights the earnings leverage that exists for crop that is over 24mt, given Graincorp’s derivative payment is maximised at around 24mt.
Read MoreFirst-half results were ahead of expectations and show the benefits of recent cost reductions and improvement in operations.
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As expected GrainCorp has delivered a $388 million statutory interim net profit thanks to the $333 million sale of its bulk liquid terminals business.
Read MoreThe company has reported its worst-ever annual result, UBS notes, heavily affected by drought and onerous rail take-or-pay contracts. A large grain trading loss of -$65m was incurred. Meanwhile, there was another record performance in the malt business.
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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.
Read MoreThe company has provided weaker FY19 guidance and expects to report an underlying net loss of $70-90m. Morgans is disappointed and concerned about the trading and risk management policies.
Read MoreGrainCorp wants to sell its terminals business (which stores and handles vegetable oils and similar products) to ANZ Terminals, a competitor for $350 million, including debt. In a statement yesterday the ACCC revealed it had raised preliminary concerns about the deal.
Read MoreUBS notes press speculation there is potential interest in the company’s malt division. The division is currently scheduled to be de-merged after the FY19 results in November.
Read MoreMorgans revises forecasts following the release of ABARES’ 2019/20 winter crop forecast. Another below-average east coast grain crop is expected, although it should be better than last year.
Read MoreNo interim dividend for shareholders in East Coast grains handler and shipper, GrainCorp after it revealed a not unexpected loss for the six months to March 31, with the severe drought the culprit.
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The outlook for GrainCorp is hazy, as the company proceeds with plans to divest and restructure businesses in the wake of LTAP pulling its acquisition proposal.
Read MoreLTAP has walked away from its proposal to acquire the company for $10.42 a share. Graincorp will now divest the bulk liquid terminals and pursue a de-merger of the malt division.
Read MoreGrainCorp shares fell more than 11% at one stage yesterday after Long Term Asset Partners walked away from $2.4 billion offer to buy the company.
Read MoreSeparating out GrainCorp’s malt business has its appeal, brokers acknowledge, but the devil is likely to be in the detail for the remaining integrated grains & edible oils.
Read MoreDrought claims another corporate victim. Grain group, GrainCorp is to split itself in half as the company’s core business continues to be assaulted by the bitter drought across much of Eastern Australia.
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The East Coast drought – now dipping into Victoria and the dry emerging parts of southern Western Australia – has seen Australia again cut its 2018-19 wheat harvest estimate to where it is now forecast to be the lowest since the GFC and the last big drought in 2008.
Read MoreGrainCorp shares jumped 34% yesterday after it revealed it had received an unwanted pre-Christmas approach from a bottom finishing unknown private equity investor.
Read MoreFY18 results were in line with expectations, albeit weak. UBS notes cash conversion was worse than in recent years and the result was boosted by a $9.2m gain on the sale of non-current assets.
Read MoreAs forecast in September, GrainCorp saw a big fall in profit that was softened by a solid performance by its barley and malting businesses which continue to ride the global craft beer boom.
Read MoreAmericans are being driven to drink – more craft beer and spirits like bourbon whisky – and as a result GrainCorp says it is enough to more than offset the impact of the East Coast drought on its business.
Read MoreMorgans revises forecasts following the release of ABARES’ 2018/19 winter crop forecast. The company now looks set to face two consecutive seasons that are well below average. Extremely low carry-over grain will also impact on FY20.
Read MoreThe company’s FY18 operating earnings guidance was weaker than expected, on lower grain export guidance. EBITDA guidance is $240-265m, which is lower than the $390.1m recorded in FY17.
Read MoreMacquarie reduces FY18 and FY19 forecasts for earnings per share by -22% and -14% respectively to account for a weaker-than-expected harvest and exports outlook.
Read MoreFY17 results were incrementally negative and below Deutsche Bank’s expectations amid rail disruptions, FX headwinds and underlying weakness in the food market.
Read MoreGrains handler and maltster GrainCorp’s shares fell nearly 5% yesterday despite the company reporting a quadrupling of full-year profit and a sharp rise in dividend.
Read MoreHence, Deutsche Bank revises the FY18 crop estimates down by -10%. The broker believes the below-trend crop has been excessively discounted in the current share price. Buy rating retained. Target is $10.
Read MoreA lack of rainfall in September has led to further damage to the FY18 winter crop. However, recent October rains reduce the risk of further yielddownside and assist summer crop soil conditions.
Read MoreNew growth initiatives have been announced for the next 6-12 months and Macquarie believes these are clear drivers for the share price, although the near-term catalyst of beating the top end of net profit guidance has largely diminished.
Read MoreNo wonder GrainCorp shares have slid in the past month – the Australian wheat harvest is being hit by record dry weather, the huge American crop is under pressure and not even rising prices in the world’s biggest grains market – Chicago can offset the rising concern of investors.
Read MoreWhile a bumper crop was known, an industrial dispute with its rail provider in the period was expected to impact on Graincorp’s earnings result. Thus the extent of the company’s consensus earnings beat was impressive, the broker suggests.
Read MoreThere’s nothing like a good grain harvest to juice up the revenue and profit performance of Eastern Australia’s biggest grains handler GrainCorp (GNC), as yesterday’s tripling in interim profit and doubling of dividend confirms.
Read MoreCredit Suisse increases the Australian east coast crop forecast by 16% for FY17, resulting in an earnings upgrade for the company of 42%. The broker has also increased forecast EBIT in FY17 for storage & logistics and also for marketing.
Read MoreFY16 results were in line with expectations and Morgans expects, with a large harvest underway, and improved earnings performance in FY17.
Read MoreGraincorp’s full-year profit dipped almost 4% to $30.9 million as its core grains business was impacted by below-average production in eastern Australia, a result that disguised another strong performance from its malt barley business.
Read MoreA large east coast harvest is under way and an improved earnings performance is expected from Graincorp (GNC) in FY17. Yet the degree of upside is unclear because of the delay to harvests and the extent to which farmers may hold back their grain because of low prices. Increased competition is another factor that may hurt the company’s volumes and margins. On this basis, Morgans, for one, believes consensus expectations are too high.
Read MoreMorgan Stanley Is tempted by the bullish upgrades to FY17 crop volumes. The latest Australian Crop Forecasters estimates of 22m tonnes would imply an EBIT upgrade of 23%.
Read MoreAhead of the FY16 results, Macquarie lifts FY17-18 earnings per share estimates by 36% and 23%, respectively, to factor in a strong rebound in volumes and margins from an above-average crop year.
Read MoreForecast winter crop production in FY17 has been revised up 8%. The mid point of forecasts now represents a 22% increase on the prior period and a return to above-average crop volumes.
Read MoreHalf year results were ahead of forecasts and a tightening of global grain supply presents upside risk to revised guidance for grain exports, Credit Suisse maintains.
Read MoreGrainCorp will pay an unchanged interim dividend of 7.5 cents a share after reporting another weak half year period.
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