The Graincorp Ltd (ASX: GNC) share price is starting the week deep in the red.
In early trade, the ASX 200 stock dropped as much as 8% to $7.70.
The grain exporter's shares have since recovered a touch but remain down 4% at the time of writing.
Why is this ASX 200 stock crashing?
Investors have been hitting the sell button this morning after the company downgraded its earnings guidance for FY 2024.
According to the release, although the first half of FY 2024 has been going to plan, its performance has taken a hit since then due to softening operating conditions. It notes that this is evidenced by weaker-than-expected margins and volumes in April.
As a result, GrainCorp expects to report FY 2024 underlying EBITDA in the range of $250 million to $280 million. This is down from its previous guidance range of $270 million to $310 million.
It will also be a significant decline on the $565 million that it recorded in FY 2023.
In addition, GrainCorp's underlying NPAT is now expected to be $60 million to $80 million in FY 2024. This is down from its previous guidance of $65 million to $95 million. Once again, this will be less than half of what it recorded in FY 2023.
It is also worth noting that this earnings guidance excludes business transformation costs and could yet change. That's because it is subject to a range of market variables. This includes second-half grain volumes, the timing and volume of grain exports, supply chain margins, and oilseed crush margins.
First half results
GrainCorp has also released a preview of its unaudited first-half results with this update.
It expects to report first-half underlying EBITDA of $164 million (down from $383 million in FY 2023) and underlying net profit after tax of $57 million (down from $200 million in FY 2023). This remains subject to the finalisation of its financial report and completion of the auditor's review.
Management commentary
The ASX 200 stock's managing director and CEO, Robert Spurway, remains positive on the future. He said:
Our team has maintained strong discipline despite the shift in industry conditions. We are focused on driving value from our integrated supply chain and continue to diversify the business through initiatives such as bulk materials handling and growth in our animal nutrition and agri-energy platforms, supported by our strong balance sheet.
The latest news of El Niño abating in Australia is a positive for growers. Recent rainfall across key growing regions, although impacting summer crop volumes and quality, has improved soil moisture profiles, and therefore the prospects for the FY25 winter crop.
