GrainCorp projects a solid FY25 with EBITDA guidance up to $320 million and announces a $50 million share buy-back, underpinned by robust East Coast Australian grain production despite regional variances.
- FY25 Underlying EBITDA guidance of $270-320 million
- Expected FY25 Underlying NPAT between $60-95 million
- Grain receivals forecast to rise to 13.0-14.0 million metric tonnes
- Up to $50 million on-market share buy-back announced
- Strategic focus on renewable fuels facility and business transformation
Strong Crop Performance Drives Earnings Outlook
GrainCorp Limited has set an optimistic tone for FY25, forecasting underlying EBITDA in the range of $270 million to $320 million, slightly ahead of the $268 million reported in FY24. Underlying NPAT is expected between $60 million and $95 million, reflecting cautious optimism amid a complex global grain market.
Managing Director and CEO Robert Spurway highlighted the strength of the East Coast Australian (ECA) winter crop, with ABARES estimating a 30 million metric tonne harvest. Early harvests in Queensland and Northern NSW have already set new receival records at several GrainCorp sites, although southern regions, particularly Victoria, faced more challenging conditions.
Rising Receivals and Export Ambitions
GrainCorp anticipates receivals to increase to between 13.0 and 14.0 million metric tonnes in FY25, up from 10.1 million metric tonnes in FY24. This growth is supported by a strong opening carry-in stock of 2.5 million metric tonnes. The company also expects to boost its export program to 6.5-7.5 million metric tonnes, up from 5.6 million metric tonnes last year, although it warns that margins may be compressed due to abundant global grain and oilseed supplies coupled with softer demand.
In the Nutrition and Energy segment, GrainCorp plans to maintain strong oilseed crush volumes despite anticipated margin pressures from a below-average Victorian canola crop and lower global oil and meal prices. The company remains focused on optimising processing facility performance to sustain sales volumes.
Strategic Initiatives and Market Positioning
GrainCorp is advancing several strategic initiatives aimed at diversifying earnings and enhancing resilience. The bulk materials program is expected to continue delivering strong earnings by increasing utilisation and improving margin profiles for non-grain products at port sites.
Notably, GrainCorp is progressing a feasibility assessment for a renewable fuels facility in partnership with Ampol and IFM Investors. This initiative aligns with broader industry and government efforts to establish a sustainable domestic renewable energy supply chain, leveraging locally sourced feedstocks. The company views this emerging market as a significant long-term opportunity with potential economic benefits for Australian growers and related industries.
Meanwhile, the first wave of GrainCorp’s Business Transformation program is underway, targeting reduced complexity and improved operational efficiency across the business.
Capital Management and Shareholder Returns
Reflecting confidence in its financial position, GrainCorp announced an on-market share buy-back of up to $50 million. This move underscores the company’s commitment to returning capital to shareholders while maintaining the flexibility to pursue organic and inorganic growth opportunities that enhance earnings resilience.
Spurway emphasized that GrainCorp’s strong balance sheet and strategic asset base position it well to navigate uncertainties in global trade policies and capitalise on emerging opportunities.
Guidance Caveats and Market Variables
The company’s FY25 guidance is subject to several variables, including second-half grain volumes, timing and volume of exports, supply chain and oilseed crush margins, and new season opportunities in the final quarter. These factors inject a degree of uncertainty, particularly given the evolving global trade environment.
Bottom Line?
GrainCorp’s FY25 outlook balances strong operational momentum with cautious navigation of global market headwinds, setting the stage for strategic growth and shareholder value.
Questions in the middle?
- How will global trade policy shifts impact GrainCorp’s export volumes and margins?
- What progress will GrainCorp make on its renewable fuels facility feasibility and potential timelines?
- How effectively will the Business Transformation program translate into cost savings and operational efficiencies?