The GrainCorp Ltd (ASX: GNC) share price will be one to watch on Thursday morning. This follows the grain exporter’s announcement of its half-year results and FY21 earnings guidance. At yesterday’s market close, the GrainCorp share price was trading 1.9% lower at $5.16.
Let’s take a look at how the company has been performing.
How did GrainCorp perform for H1 FY21?
GrainCorp shares could be on the move today after the company reported robust trading conditions and an upgrade to FY21 guidance.
For the half-year ending 31 March, GrainCorp delivered revenue of $2,63.5 million, up 30.8% on the prior corresponding period. The significant earnings increase came from a favourable turnaround in growing conditions for the 2020/2021 winter crop. Total ECA (East Coast Australia) production improved to 31.4mmt (million metric tonnes), reflecting a 166% jump on the prior H1 FY20 period.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations grew to $140 million. This included a $70 million payment by GrainCorp under the Crop Production Contract (CPC). In comparison, the business achieved $105 million in EBITDA for this time last year. Earnings in both its agribusiness and processing segments drove the strong performance.
As a result, underlying net profit after tax (NPAT) rose to $51 million, a lift from the $27 million recorded in H1 FY20.
The board declared a fully franked interim dividend of 8 cents per share to be paid to shareholders on 22 July. This represents a slight increase on the 7 cents delivered at the company’s full-year 2020 results.
GrainCorp managing director and CEO Robert Spurway commented:
Our Agribusiness earnings were up substantially, driven by the much larger crop and increased grain volumes in our network. Receivals and exports were up materially, supported by strong global demand and pricing for Australian grain and oilseeds.
The Processing business also performed strongly, with high asset utilisation and positive oilseed crush margins. Global demand for vegetable oils remains elevated and this is supporting values across our oils portfolio, including canola oil and used cooking oil (UCO).
In further news that could impact the GrainCorp share price today, the company upgraded its earnings guidance for the FY2021 full year.
Underlying EBITDA is expected to come between $255 million and $285 million, up from the previously indicated $230 million to $270 million. Furthermore, underlying NPAT is projected to be around $80 million to $105 million, up from $60 million to $85 million.
Mr Spurway went on to add:
We are pleased with the positive momentum across the business. There is good export demand, that extends well into FY22, supported by high levels of carry-out grain anticipated at the full year. Good sub-soil moisture across many parts of ECA is also positive for current winter crop planting. We are looking forward to working with growers and preparing for the next harvest.
GrainCorp share price summary
Over the past 12 months, the GrainCorp share price has increased by more than 50%. The company’s shares are also up by around 23% year to date and are not far off their 52-week high of $5.52.
Based on the current share price, GrainCorp has a market capitalisation of around $1.1 billion, with 228 million shares outstanding.