Today, agricultural logistics and processing company GrainCorp [ASX:GNC] released its results for FY22, claiming a ‘record’ year for business.
GNC showed net profits (NPAT) had increased more than double on the previous year, going up from $139 million to $380 million.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) also climbed, up from $331 million reported in 2021 to $703 million in 2022.
And yet, shareholders weren’t thrilled. In fact, the share price slipped 3% mere hours after the release.
GNC also tripped downwards by more than 6% year-to-date and more than 7% in the last month alone.
Source: TradingView
GrainCorp records improvements all round
GrainCorp, the farmed goods distributor, updated its results for the fiscal year 2022, along with an investor presentation.
The agri-logistics business reported a ‘record’ year, including an EBITDA increase of $372 million over 2021 and $241 million more in NPAT.
For the agribusiness alone, there was a 127% increase year-on-year totalling $624 million, with grain volume increasing from 34.4mmt (million metric tonnes) to 41.1mmt.
Improvements were attributed to ‘strong supply chain margins for grain exports’, helped by rising global demand, and GNC grain inventories increasing from 0.7mmt to 4.3mmt year-on-year.
Processing EBITDA was also up 63%, with $127 million on high oilseed crush margins and strong demand for vegetable oils as global production encountered supply issues across the Black Sea.
GNC also reported a high of 27.9% in ROIC (Return on Invested Capital) compared to 11.1% the previous year, driven by record oilseed and food volumes and strong Agri-Energy growth, as well as paid-back ECA investments.
The company was able to offer 54 cents per share fully franked in 2022 and ended the year with a balance sheet of $177 million in solid cash.
GrainCorp’s CEO Robert Spurway commented:
‘GrainCorp delivered a record result in FY22, with earnings up more than 100% on last year.
‘The result reflects the quality of our businesses and infrastructure assets, our operational performance, and the capability of our teams.
‘Each of our business segments recorded an increase in activity and volumes, with more grain handled and exported, higher oilseed crush volumes and stronger foods sales.
‘Our teams worked hard to navigate supply chain challenges and continue delivering for our customers, while effectively managing costs and broader inflationary pressures.
‘Disruptions to global supply chains were driven by weather events, the ongoing impacts of COVID-19 and the conflict in Ukraine.
‘Despite these challenges, global demand for Australian grain, oilseeds and vegetable oils remained strong throughout FY22 after two consecutive bumper crops in east coast Australia (ECA).’
Source: GNC
Rainfall and floods jeopardise crops but GNC still confident
GNC sees its core initiatives driving a lift in EBITDA of $40 million by the end of 2023 to early 2024. Mr Spurway stated:
‘ECA conditions have been favourable leading into the 2022/23 winter harvest, with ABARES currently forecasting another well above-average crop.’
GNC’s CEO also addressed heavy rainfall negatively impacting crops, affecting ‘yield and quality’ but placed confidence in the company’s grain inventory network and export programs through 2023, summarising:
‘Pleasingly, domestic and global demand for feed and milling grades remains strong…
‘Oilseed crush margins are expected to remain favourable, and we are well positioned to continue operating our crushing facilities at high utilisation.
‘Overall, GrainCorp is well positioned for the new financial year, with our businesses performing well, a strong balance sheet and pipeline of growth opportunities.’
Source: GNC
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