Guess which ASX 200 stock is rising after announcing a special dividend with its FY23 results

Earnings are down but a special dividend is coming for shareholders.

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The Graincorp Ltd (ASX: GNC) share price is rising on Thursday.

In morning trade, the ASX 200 stock is up 4.5% to $7.76.

This follows the release of the grain exporters full-year results for FY 2023.

How did the ASX 200 stock perform?

Here's a summary of how Graincorp performed during the 12 months ended 30 September.

  • Revenue up 4.6% to $8,229.1 million
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) down 19.6% to $565 million
  • Net profit after tax down 34% to $250 million
  • FY 2023 dividends flat at 54 cents per share (inc. special final dividend)
  • On-market share buy-back of $50 million

What happened during FY 2023?

Graincorp's earnings fell in FY 2023 due to weakness in the key Agribusiness segment. It posted EBITDA of $401 million, which is down 36% year on year. Management advised that volumes and margins were down from the record level seen in FY 2022, although remained above historical averages.

This offset a strong performance from the Processing segment, which reported EBITDA growth of 20.4% to $153 million. This reflects record crush volumes and margins. Management advised that favourable oilseed margins were bolstered by a large ECA canola crop, sustained global demand for vegetable oils driven by nutrition and Agri-energy sectors, and supply constraints in other key growing regions.

At the end of the period, the ASX 200 stock finished with a core cash balance of $349 million. This excludes the $127 million received from the acquisition of UMG by Malteries Soufflet on 15 November 2023.

In light of its strong balance sheet, Graincorp declared a total final dividend of 30 cents per share. This comprises a final ordinary dividend of 14 cents per share and a special dividend of 16 cents per share. Both are fully franked and will be paid on 14 December. It also announced a $50 million share buy-back.

Outlook

The ASX 200 stock's CEO, Robert Spurway, provided a mixed outlook statement which revealed that volumes are expected to remain high but margins are likely to soften. He commented:

The ECA winter crop harvest commenced earlier than last year and is drawing to a close in Queensland, while NSW and Victoria harvests are underway. We've seen drier conditions in the northern half of ECA, but overall quality across all commodities has been excellent and harvest is now progressing well in key southern growing regions.

Looking ahead, we expect crush volumes to remain high, whilst margins are anticipated to moderate from FY23 levels. Our current balance sheet provides us with flexibility to pursue our strategic priorities by exploring organic and inorganic growth opportunities, investing in our core business to drive better returns on assets, and continuing to optimise total shareholder returns.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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