GrainCorp has posted a full-year underlying loss of $82 million as one of the worst droughts on record in eastern Australian more than halved grain production.
“The past year was an extremely challenging one for GrainCorp, resulting in disappointing financial results for the company, for our people and four our shareholders,” chairman Graham Bradley said in a letter to shareholders on Thursday.
The drought cost it $114 million in east coast grain production, receivals and exports and another $15 million under expiring “take-or-pay” rail contracts that meant GrainCorp had to pay rail operators for shipping grain it didn’t ship.
East coast production of GrainCorp’s five core grains – wheat, barley, canola, chickpeas and sorghum – was down 53.9 per cent to 7.7 million metric tonnes.
Global trade tensions also disrupted grain trade flows, causing a rapid decline in Western Australia feed wheat and grain prices, costing the company $65 million.
Adding in the $31.3 million net loss GrainCorp incurred responding to an aborted takeover offer from Long-Term Asset Partners and the pending demerger of its international malting business, GrainCorp suffered a statutory loss of $113 million.
GrainCorp had a $71 million profit in FY18.
It made $4.85 billion in revenue from continuing operations in the 12 months to September 30, up 14 per cent from a year ago.
GrainCorp said it responded to grain deficits in Queensland and NSW by reversing its port supply chains and trans-shipping over two million million tonnes of grain from other states to satisfy demand in eastern Australia.
“Trans-shipments of this size are rare, and this emphasises the severity of the drought and demonstrates our ability to adapt to manage these extreme factors,” GrainCorp chief executive Mark Palmquist said.
These shipments from WA, South Australia and Victoria are expected to continue throughout the financial year, GrainCorp said.
The GrainCorp board said it wouldn’t pay a final dividend. It had also scrapped its interim dividend. Last year it paid an eight cent final dividend.
GrainCorp said a 10-year crop production contract it had entered into with White Rock Insurance in June would help it manage future risk associated with the volatile eastern Australian winter grain production.
GrainCorp said its malt business – which it is spinning off next year, if shareholders approve – had a good year, with $170 million in earnings, up $6 million from in FY18.