GrainCorp share price falls despite record-breaking half-year profits

Agricultural ASX share price on watch represented by farmer in field looking at tablet computer

Agricultural ASX share price on watch represented by farmer in field looking at tablet computer

The GrainCorp Ltd (ASX: GNC) share price is falling on Wednesday morning.

At the time of writing, the grain exporter’s shares are down 3% to $10.22 following the release of its half-year results.

GrainCorp share price falls despite record result

  • Revenue up 49.9% to $3,842.1 million
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) up 200% to $427 million
  • Net profit after tax up 382% to $246 million
  • Fully franked interim dividend increased 50% to 12 cents per share
  • Additional fully franked special dividend of 12 cents per share declared

What happened during the first half?

For the six months ended 31 March, GrainCorp reported a 49.9% increase in revenue to $3,842.1 million and a 200% jump in EBITDA to $427 million.

The latter was driven by strong growth across both the Agribusiness and Processing segments.

GrainCorp’s Agribusiness segment reported a 200% increase in EBITDA to $376 million. This reflects an increase in total grain handled and strong supply chain margins for grain exports. An increase in opening grain inventories also contributed to storage and export volumes.

Whereas the Processing segment delivered a 192% increase in EBITDA to $70 million for the half. This was driven by increased oilseed crush margins and ongoing efficiency improvements. Crush margins were supported by strong global demand for vegetable oils, thanks to global production challenges in canola and soybean, disruption of supply out of the Black Sea region, and strong demand for renewable fuel feedstocks.

This strong profit growth allowed the GrainCorp board to declare a 12 cents per share fully franked interim dividend and an additional 12 cents per share fully franked special dividend. This compares to an interim dividend of 8 cents per share a year earlier.

Management commentary

GrainCorp’s Managing Director and CEO, Robert Spurway, commented:

I am pleased to announce an exceptional first half result, which is a record for GrainCorp. The result reflects excellent performance across all business areas and resilience in our supply chain.

Recent weather patterns and continued La Niña conditions have provided excellent planting conditions for the 2022-23 winter crop to date, building confidence in grain supplies from ECA and further supporting export sales and supply chain margins.

GrainCorp is in a strong position to maximise opportunities through the current cycle, while also progressing our strategic initiatives in our core, growth and ESG areas. Planning is well underway for additional investment in the lead-up to the 2022-23 harvest to efficiently manage the volumes to be delivered by growers.

Outlook

Possibly weighing on the GrainCorp share price this morning is the company’s full-year guidance.

While a very strong result is expected, there has been no change to its previous guidance. Some investors may have been betting on another upgrade from management after two in as many months.

GrainCorp continues to guide to underlying EBITDA of $590 million to $670 million and underlying net profit after tax of $310 million to $370 million.

The post GrainCorp share price falls despite record-breaking half-year profits appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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