AUSTRALIA – GrainCorp, a leading Australian agribusiness, reported a significant decrease in its first-half profits for the current fiscal year, attributing the decline to reduced grain production volumes. 

On May 16, the company announced a 75% drop in net profit, recording A$49.6 million (approximately US$33.24 million) for the six months ended March 31, compared to A$200.3 (US$134.22) million in the same period last year. Revenue also fell by 26% to A$3.38 (US$2.26) billion.

As expected, we have experienced a decline in overall production across East Coast Australia (ECA) and lower supply chain and crush margins relative to the first half of 2023,” said Robert Spurway, managing director and chief executive officer of GrainCorp. “Below-average conditions in Queensland and Northern NSW have offset strong volumes in Southern NSW and Victoria.

The challenging conditions in ECA and Western Australia led to a significant drop in earnings before interest, tax, depreciation, and amortization (EBITDA) in the company’s Agribusiness segment, which fell to A$101 (US$67.68) million from A$226 (US$151.44) million in the first half of 2023. 

GrainCorp highlighted that lower production in the drier northern regions of ECA particularly impacted export volumes and margins.

GrainCorp’s International business faced challenges, with decreased volumes and margins driven by lower production in Western Australia and increased global production. 

The company’s Nutrition and Energy segment saw a decline in EBITDA, falling from A$131 (approximately US$87.78) million in fiscal 2023 to A$76 (US$50.93) million in the first half of 2024.

Despite these setbacks, GrainCorp reported a record amount of canola seed crushed at its processing sites. However, this achievement was tempered by moderated crush margins, influenced by a lower supply of canola seed and weaker vegetable oil prices. 

In the Animal Nutrition segment, demand for liquid oils and molasses products spurred an increase in sales volume. Additionally, Agri-energy sales of used cooking oil and tallow were bolstered by strong North American demand, reflecting an expanded customer base and higher tallow volumes due to an elevated slaughter rate in the domestic cattle industry.

Looking ahead, Spurway emphasized GrainCorp’s commitment to maximizing value from its integrated supply chain and diversifying its business. This includes bulk materials handling and growth initiatives in its Animal Nutrition and Agri-Energy platforms.

Despite the moderation in industry conditions in FY24, the long-term fundamentals of the agriculture sector remain strong,” Spurway said. “The industry plays a pivotal role in human and animal nutrition, and as a feedstock source for global decarbonization efforts.”

Spurway noted early positive indicators regarding the 2023-24 winter grains crop. “Recent rainfall and a healthy soil moisture profile have supported a strong planting period in ECA, with northern regions expected to rebound from 2023-24.

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