May 15, 2014

Graincorp pleased with grain business performances despite drop in 2014 earnings
 

Australia's GrainCorp has reported a high yield 2014 (HY14) earnings of AUD166 million (US$156 million) EBITDA (HY13: US$213 million), and a net profit after tax (NPAT) of AUD61 million (US$57.2 million) which is previously US$102.1 million for HY13.

The statutory NPAT of AUD50 million (US$47 million) includes significant items relating to the network optimisation project within GrainCorp Oils.

Despite a drop in earnings, GrainCorp's executive chairman and interim CEO, Don Taylor, is positive about the result, explaining that the company is dealing with a more challenging period for its grains businesses. He was also optimistic about performances of these businesses given the lower crop volumes.

"GrainCorp Malt and GrainCorp Oils have both delivered consistent results, with Malt continuing to operate at high capacity and GrainCorp Oils performing well despite continuing pressure on refining volumes," Taylor said.

"Our Storage & Logistics business' earnings were affected by a below average carry-in and the smaller crop in northern regions. This translated to lower grain receivals and increased demand from domestic end-users, limiting the amount of grain available for export. While the intense competition for a smaller crop also means that GrainCorp Marketing's result was lower on-year, it is pleasing that this business has reported a positive result in an environment that has been extremely challenging."

Mr Taylor also revealed the company's satisfaction with a 43% improvement in its rolling 12 month average Lost Time Injury Frequency Rate, and was focused on maintaining the record through continual investment and physical, system and process improvements.

In the meantime, GrainCorp's Board has declared an interim dividend of AUD0.15 (US$0.14) per share (HY13: US$0.23 per share plus US$0.05 per share) which represents a payout ratio of 56% of NPAT before significant items.

According to company policy, Graincorp is to pay 40-60% of NPAT through the cycle.

Taylor said it remained GrainCorp's expectation that FY14 earnings would be heavily weighted to the first half as a result of a busy export programme and low residual levels of grain in the network. As a result, the company was maintaining a full year earnings guidance which it provided in February (EBITDA of US$258 - US$295 million and underlying NPAT of US$75 - US$94 million).

"Looking further ahead, some good pre-planting rains have been recorded in many areas of our catchment with canola planting substantially underway in many areas and good starts for wheat and barley. However, it's a long season and, as always, favourable conditions and good finishing rains will be critical to the delivery of a good crop in eastern Australia," he said.