How Did GrainCorp Achieve 21% Revenue Growth and Boost Dividends?
GrainCorp Limited reported a strong first half with revenue up 21% to $4.09 billion and net profit rising 17% to $58.1 million, prompting an increased dividend and share buy-back program.
- 21% revenue growth to $4.09 billion in 1H25
- Net profit after tax up 17.1% to $58.1 million
- Interim dividend maintained at 24 cents per share, fully franked
- On-market share buy-back increased to $75 million
- Agribusiness segment benefits from higher production and supply chain investments
Robust Financial Performance
GrainCorp Limited has delivered a solid financial performance for the half-year ended 31 March 2025, with revenue climbing 21% to $4.09 billion and net profit after tax increasing by 17.1% to $58.1 million. This growth reflects a combination of higher grain production, strategic supply chain investments, and operational efficiencies across its core businesses.
Dividend and Capital Management
The Board has declared a fully franked interim dividend of 24 cents per share, consistent with the prior year, comprising a 14 cent ordinary dividend and a 10 cent special dividend. Additionally, GrainCorp has expanded its on-market share buy-back program from $50 million to $75 million, signaling confidence in the company’s outlook and commitment to returning value to shareholders.
Agribusiness Segment Strength
The agribusiness segment benefited from an above-average East Coast Australia crop production of 33.8 million metric tonnes, driven by strong yields in Queensland and New South Wales. This was partially offset by lower production in Victoria. GrainCorp capitalized on export opportunities in chickpeas and canola seeds, while bulk materials handling margins improved by 12% year-on-year. The company also invested in up-country infrastructure to enhance supply chain efficiency.
Nutrition & Energy Segment Mixed Margins
The Nutrition & Energy division saw stable crush volumes but faced margin pressures due to a smaller canola crop in Victoria and subdued global vegetable oil demand. However, edible oil sales volumes increased domestically, and animal nutrition sales grew, supported by dry conditions in New Zealand and strong dairy sector demand. The segment also completed the transition of New Zealand processing volumes to Melbourne.
Risk Management and Financial Position
GrainCorp continues to manage commodity price risk through a mix of exchange-traded and over-the-counter derivatives, maintaining a core cash position of $296.4 million. The company’s crop production contract, which involves complex valuation assumptions tied to weather and production forecasts, impacted earnings by $42 million in the half-year. The financial statements were reviewed by PricewaterhouseCoopers, who reported no issues.
Bottom Line?
GrainCorp’s strong half-year results and enhanced capital returns set the stage for close monitoring of crop production risks and global commodity dynamics.
Questions in the middle?
- How will GrainCorp manage ongoing volatility in global grain and oilseed markets?
- What impact will the crop production contract have on future earnings amid uncertain weather patterns?
- Will the increased share buy-back program influence investor sentiment and share price momentum?
