Why GrainCorp (ASX:GNC) upgraded its FY22 earnings guidance

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Highlights

  • GrainCorp’s underlying EBITDA is forecast to rise in the range of AU$590 million to AU$670 million.

  • The company’s NPAT is expected to surge to the range of AU$310 million-AU$370 million.

  • The company is scheduled to release its half-year financial results in May 2022.

GrainCorp Ltd (ASX:GNC) has upgraded its earnings guidance for the fiscal year 2022, driven by robust demand for grain and oil seeds.

The company’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to rise to AU$590 million-AU$670 million, from the earlier expectations of AU$480 million-AU$540 million, GrainCorp said in its latest update released on Friday.

Similarly, the company’s net profit after tax (NPAT) is expected to surge to AU$310 million-AU$370 million, from the previous expected range of AU$235 million-AU$280 million.

GrainCorp is engaged in receiving and storage of grain and related commodities. The company is scheduled to release its half-year financial results in May 2022.

Management’s comment on lifting guidance

GrainCorp’s management said that the upward revision of the earnings guidance indicated significant ongoing global demand for Australian grain and oilseeds. It also highlighted favourable planting conditions for the upcoming east coast Australian winter crop.

“As we outlined at our AGM in February, we are seeing high global demand for Australian grain and oilseeds and strong supply chain margins for grain exports. This has been driven by two consecutive bumper crops in east coast Australia (ECA), coupled with supply shortages in the northern hemisphere,” said GrainCorp’s Managing Director and CEO Robert Spurway.

“The conflict in Ukraine and resulting trade disruptions in the Black Sea region have created uncertainty in global grain markets, with buyers looking for alternate sources of supply. This has further increased both the demand for Australian grain and oilseeds and export supply chain margins,” Spurway added.

Meanwhile, the company also noted that it expects total FY22 receivals in the range of 16 mmt to 17 mmt, from 16.5 mmt last year. The exports would be in the range of 8.5 mmt to 9.5 mmt, from 7.9 mmt last year.

GrainCorp’s share price snapshot

The stock has given a return of over 3% on a year-to-date (YTD) basis. In the past one year, the stock rose nearly 62%.  The share price is up over 2% in the past month.

The stock’s 52-week high and low stand at AU$9.11 and AU$4.76, respectively.  The stock last closed on Thursday at AU$8.69.

The company has a market capitalisation of nearly AU$2 billion.

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