Bloomberg News

GrainCorp Sees Better Quality, Profit Doubles on Record Crop

November 24, 2011

(Closes share price in fifth paragraph.)

Nov. 24 (Bloomberg) -- GrainCorp Ltd., eastern Australia’s largest grain handler, said this year’s harvest may be of better quality because of a drier start to the season after the company reported profit more than doubled on last year’s record crop.

Net income rose to A$171.6 million ($167 million) in the 12 months ended Sept. 30 from A$80.2 million a year earlier, Sydney-based GrainCorp said today in a statement. That compares with its July 25 forecast of A$145 million to A$165 million.

Australia, the world’s third-biggest wheat shipper, produced a record 26.3 million metric tons of wheat last season, according to a government estimate, even as La Nina-linked rains during harvest in the east coast cut grain quality. The wheat crop is forecast at 26.2 million tons this year and exports may reach a record 20.4 million tons, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

“We’re seeing a better quality profile certainly than last year because the conditions have been drier and we haven’t had the weather-related disruption that occurred last year,” Chief Executive Officer Alison Watkins said on a conference call today. “We’re very optimistic about the outcome for Victoria and southern New South Wales.”

GrainCorp rose 3.1 percent to A$7.58 at the close of Sydney trading, the biggest gain since Oct. 17. The shares have advanced 16 percent this year. The company will pay second-half dividends totaling 35 cents, taking the full-year payment to 55 cents.

Strong Exports

Grain receivals doubled to 14.9 million tons, while exports totaled 8.1 million tons, up from 3.5 million tons a year earlier, the company said. Stockpiles totaled a record 6 million tons at Sept. 30, it said. The company has received 5.2 million tons of grain so far in the 2011-2012 season.

“We see another strong year of exports,” Watkins said. “This year, just in October and November, we’ve already shipped out about 1 million tons. Normally our ports would be a lot quieter at this time of year, so the carryover has meant that export program has been able to continue unabated.”

The company currently has about 7.8 million tons worth of export bookings, Watkins said. East coast production of wheat, barley and canola may reach about 19.1 million tons in the 2011- 2012 season, GrainCorp said, citing Australian Crop Forecasters.

“The kind of disruption that occurred last year was very much a function of the extreme weather conditions,” Watkins said today. “We don’t see more of that kind of disruption.”

--Editors: Ryan Woo, Keith Gosman

To contact the reporter for this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net.


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