The GrainCorp Ltd (ASX: GNC) share price has been on form on Thursday following the release of its full year results.
The grain exporter’s shares were up as much as 8% to $4.32 at one stage in early trade.
The GrainCorp share price has given back most of these gains now but is still up 1% to $4.03 at the time of writing.
How did GrainCorp perform in FY 2020?
GrainCorp reported an improved financial performance following a year of significant transformation.
For the 12 months ended 30 September, the company reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations of $108 million. This compares to an underlying EBITDA loss of $107 million a year earlier.
Things weren’t quite as positive for its underlying net profit after tax, which came in at a loss of $16 million. Though, this is still a major improvement on FY 2019’s $158 million loss.
GrainCorp’s statutory net profit after tax was far better at $343 million, compared to a loss of $113 million a year earlier.
Despite its underlying loss, the company’s board has reinstated its dividend and will pay shareholders 7 cents per share fully franked.
Managing Director and CEO, Robert Spurway, commented: “GrainCorp reported a substantially improved financial performance in FY20, despite a third year of drought. We are delivering on our operational initiatives and these are providing more consistent and stable earnings for the business.”
“The most significant drivers in the year were the positive impact from the Crop Production Contract (CPC), improved performance from our East Coast of Australia (ECA) grains and international trading businesses, and stronger oilseed crush volumes and margins,” he added.
While no concrete guidance was given for FY 2021, management advised that it expects growth in earnings. This is due to the anticipated larger ECA winter crop and the ongoing benefits from recent operating initiatives.
In Agribusiness, improved growing conditions and current grain receival year to date, indicate a very strong 2020/21 winter crop, similar in size to the FY 2017 harvest.
Whereas in Processing, the expected increased supply of Canola seed will continue to support strong oilseed crush margins, partially offset by reduced meal values.
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Returns as of 6th October 2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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