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GrainCorp’s 2022-23 revenue up, earnings down, similar trends expected in 2023-24

GrainCorp (ASX:GNC), Eastern Australia’s major grain and oilseeds group, has disclosed higher revenue but significantly lower earnings for the fiscal year ending in September. The company indicated that the upcoming 2023-24 financial year is likely to follow a similar pattern.

The company announced on Thursday that it had transformed a 4.6% increase in revenue for the 2022-23 year, totaling $8.229 billion, into a 34% decline in net after-tax profit, amounting to $250 million. This decrease was attributed to a 19% drop in EBITDA to $565 million, resulting in the company’s return on invested capital decreasing from 27.9% in 2021-22 to 18.%.

Despite this performance decline, GrainCorp will maintain its annual dividend to shareholders at 54 cents per share, with a two-part final payment, comprising 14 cents ordinary and 16 cents special payout, similar to the previous year. Additionally, the company plans to initiate a share buyback program of up to $50 million.

Commenting on the FY23 results, GrainCorp’s Managing Director & CEO, Robert Spurway, stated that the company had achieved another commendable performance in FY23, with both the Agribusiness and Processing business segments contributing positively.

“The result clearly reflects our disciplined focus on operational performance, the capability of our people, and the momentum we continue to build. GrainCorp continues to advance its strategy of strengthening the core of the business through targeted investments in our value chain. We have improved the performance of our oilseed crush for the fifth consecutive year and are exploring the construction of a new processing plant in WA with an annual capacity of 750,000 to 1 million tonnes.”

Spurway added, “Our exceptional balance sheet, with core cash of $349 million, also provides us with the flexibility to return capital to shareholders while pursuing growth opportunities.”

Looking ahead to the new financial year, Spurway mentioned, “The East Coast Australia (ECA) winter crop harvest started earlier than last year and is concluding in Queensland, while NSW and Victoria harvests are in progress. We’ve experienced drier conditions in the northern half of ECA, but overall quality across all commodities has been excellent, and harvest is progressing well in key southern growing regions.”

However, the statement’s closing phrase, “whilst margins are anticipated to moderate from FY23 levels,” implies that GrainCorp expects another average year with margin pressures persisting from 2022-023, potentially resulting in lower earnings.

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