Australia: Drought cuts into GrainCorp profit
Higher grain deliveries helped barley, sorghum and canola marketer GrainCorp more than double its annual profit, New Digital Media published on December 01. But GrainCorp is still predicting a net loss of up to $30 million this financial year as drought conditions crimp its grain intake.
GrainCorp's net 2005-06 profit soared from $13.5million to $31.7million as grain receivals rose 16 per cent to 10.8 million tonnes.
Stripping out one-off items, including a $7.8million reset preference share distribution, underlying net profit rose 193 per cent to $39.5million, above its $35-37million forecast.
GrainCorp managing director Tom Keene said the group still expected a $20-30million net loss this year. "The outlook for the current year reflects the extensive drought conditions across the east coast and other states," he said.
He said 1.9 million tonnes of the anticipated total of 2-4 million tonnes for 2006/07 had so far been received in the grain system - and there were early indications for a strong summer crop planting if it rained.
Harvesting is expected to continue in various parts of NSW and Victoria for the next three to four weeks. Mr Keene said the company, which operates mainly on the east coast, was focusing on cutting costs and improving revenue and expected to remain cashflow-positive in fiscal 2007.
GrainCorp saved $10 million in costs in 2005/06, mainly in its top-earning storage and handling business, from which 85 sites were closed and up to 120 jobs cut in a bid to streamline its network. Mr Keene said no more closures or job losses were expected. Sales revenue from the storage and handling division jumped 31 per cent in the year to September 30.
The company also said it was set for expansion through strengthened international marketing relationships should further wheat and barley export opportunities arise this year.
After the oil-for-food scandal involving monopoly wheat exporter AWB, GrainCorp was invited by the Federal Government to form the so-called Wheat Australia consortium with ABB Grain and CBH Group.
Mr Keene said the group was still getting offers from Iraq's Grains Board and had recently applied twice to AWB's export arm, AWB International, for permission to sell wheat directly to Iraq. Both were rejected.
GrainCorp's revenue rose 18per cent to $816million in 2005/06. Directors declared a fully franked 30c final dividend for a 50c full-year total, up from 7c.
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