Graincorp shares have wilted after the company flagged an underlying full-year loss of up to $90 million thanks to continued drought and “significant” global grain market disruptions.
The bulk grains handler said on Friday its FY19 results would be worse than previously announced, with the $40 million earnings hit predicted in April now blowing out to between $60 million and $70 million.
Graincorp said new crop trading opportunities in Q4 are no longer expected to materialise due to reluctance from international market participants to consider new season contracts.
Shares in the company lost almost 10 per cent of their value at Friday’s open, and were still 6.87 per cent lower at $8.00 by 1030 AEST.
“This is an extremely difficult year for GrainCorp due to the significant disruptions we’ve seen in global grain markets, compounded by the drought in eastern Australia,” chairman Mark Palmquist said.
“The extraordinary circumstances in eastern Australia are highlighted by the fact we expect to ship 2.3 million tonnes of grain from South and Western Australia to meet east coast domestic demand.”
GrainCorp withheld an interim dividend in May after it swung to a $59 million half-year loss following severe drought conditions and trade disruptions.
The company’s share price had already slumped more than nine per cent that month after suitor Long-Term Asset Partners withdrew a $2.38 billion takeover offer.
The ACCC has also expressed concerns over the proposed $350 million acquisition of Graincorp’s Australian bulk liquid terminals business by ANZ Terminals, with a decision to be made on the deal in October.
Meanwhile, Graincorp said on Friday its 10-year grain production risk contract should reduce volatility in cash flow from FY20, as well as better safeguarding earnings in lower production seasons.