Shares in GrainCorp (ASX: GNC) are expected to lift at the open after the agribusiness upgraded its earnings and profit guidance following a robust first-half result.
Due in part to a large east coast harvest, GrainCorp’s 1H FY25 profit was up 17% at $58,1 million, while underlying profit at $69 million was up from the previous period ($57 million).
While revenue was up 21% to $4.09 billion, underlying earnings at $202 million were also up from the previous period ($164 million).
Equally pleasing to shareholders management maintained its dividend payout.
On July 17 the group will pay an interim dividend of 24 cents per share, including a special dividend of 10 cents.
The group also extended its share buyback to $75 million from $50 million.
Strong contributions from East Coast Australia (ECA) – which offset weaker international performance - benefited from increased grain production and tonnes received into the network.
ECA also capitalised on opportunities across several commodities including chickpea and canola seed exports.
GrainCorp’s CEO Robert Spurway reminded the market that GrainCorp remains well positioned to manage evolving global trade flows, by servicing a broad and geographically diverse range of end markets, with minimal exposure to the U.S. market.
“GrainCorp has the strategy, capability and network flexibility to respond quickly to shifting trade dynamics and seize opportunities arising from global market volatility,” Spurway said.
Other key 1H FY25 updates include:
- Core Cash $296 million (FY24: $337 million).
- Agribusiness earnings were $141 million in 1H25 (1H24: $101 million).
- Nutrition and Energy earnings were $75 million, in line with 1H24.
Outlook
GrainCorp guided to higher FY25 underlying earnings of $285-325 million and underlying profit of $65-95 million.
That compares with previous underlying earnings expectations of $270-320 million and underlying profit of $60 million - $90 million.
"In an environment of strong global production and tight margins, our strong balance sheet positions us well to manage risks and capitalise on opportunities while our operations remain focused on efficiency, reliability, and delivering long-term value,” said Spurway.
Looking ahead to the 2025-26 east coast winter crop, Spurway noted that Summer rainfall had built a healthy soil moisture profile in Queensland and Northern NSW once again, supporting a strong planting window and creating the potential for an above-average crop.
“In contrast, parts of Victoria and Southern NSW have received below-average rainfall, creating a more variable outlook for cropping conditions. Autumn and winter rain will be important for growers.”
Graincorp has a market cap of $1.5 billion making it an ASX300 stock. The share price is down 11% over one year and down 2.55 year-to-date.
The stock’s shares appear to be in a strong near-term rally within a long-term bearish trend.
Consensus is Moderate Buy.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
