GNC Updates on Sale of Australian Bulk Liquid Terminals; Provides Half-Year Results

GNC

GrainCorp Limited (ASX:GNC) is an agricultural business company based in Australia. The company provides grain storage, handling and freight services on Australia’s east coast. It focusses primarily on barley, wheat and canola grains.

On March 4 2019, the company announced that it has embarked a new agreement for the sale of Australian Bulk Liquid Terminals business to the ANZ Terminals Pty Ltd for $350 million. With regard to this agreement, GrainCorp Oils would have a long-term storage agreement with ANZ Terminals. According to Managing Director and CEO Mark Palmquist, this holds notable value for shareholders.  Relieving assets into another experienced hands would allow GNC to secure access to the storage. This is a requisite in the support of oils business, and it would in turn release capital while unlocking. The long-term storage agreement in this regard is also an advantage for the company. Further on the same topic, today (10 May 2019), the company notifies that the condition of not entering into a change of control transaction or other material alternative transaction, had now been satisfied. The other conditions of the sale remain as they were in the previous announcement.

GNC presented its results for the Half-Year ended 31 March 2019, on 9 May 2019. The Underlying EBITDA was $27m compared to $119m in pcp. The underlying net loss after tax was $48m, while there was a net profit of $36m in pcp. The statutory net loss after tax was $59m against a profit of $36m in pcp. Based on its financial performance, the Board determined that an interim dividend would not be paid in this period.

As of 31 March 2019, the company holds Total assets worth $4494.1m against $3,974.7m in pcp. Total liabilities amounted to $2,642.6m against $2,032.5m in pcp. The Total equity stood at $1,851.5m against 1,942.2m in pcp. The company’s Core debt gearing ratio was 32% against 21% in pcp.

The Net outflow from operating activities was $181.5m as against $38.6m in pcp. The Net outflow from investing activities stood at $45.5m, against $57.5m in pcp. The Net inflow from financing activities amounted to $138.5m against an outflow of $1.5m. Cash and cash equivalents at the end of the period were $282.8m against $292.7m in the pcp.

Grain segment-wise, the Malt sales volumes were steady, and the revenue went up, though Barley supply was affected due to adverse weather in Canada. The company has begun a project worth £51 to expand malting capacity in Scotland by 79,000 tonnes. This is due to be complete in CY2021.

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The drought affected the sales of grains as well. The company, however, is continuing to focus on cost reduction, customer engagement and asset utilisation. A marketing office is due to open in India for business expansion. Oilseeds saw a decline in sales. Foods, feeds and liquid terminals, however, are on the path of improvement.

On the company’s performance outlook front, the company expects continued healthy demand for Malt products in 2019 aided by the continuous improvement program in Foods during second half.

Stock Price Information:

GNC shares closed the day’s trade at A$7.540 (as on 10 May 2019), trading down by 1.18% as compared to its previous close.


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