GrainCorp Edges Up On Expansion Of Scottish Malting Capacity To Support Distilling Growth

  • Oct 18, 2018 AEDT
  • Team Kalkine
GrainCorp Edges Up On Expansion Of Scottish Malting Capacity To Support Distilling Growth

As a result of strong sectoral growth and customer demand, GrainCorp Ltd (ASX: GNC) has made an announcement today regarding the expansion of its Scottish malting capacity. By upgrading the Arbroath facility, GrainCorp’s United Kingdom-based business, Bairds Malt will result in total annual malting capacity to increase by 79,000 tonnes. It also requires that at their Inverness site, a new state-of-the-art malting plant is built. This will result in increasing the annual capacity of Bairds Malt’s over 300,000 tonnes. Mark Palmquist, the Managing Director and Chief Executive Officer of GrainCorp highlights the history of Bairds Malt of supplying high-quality malt which is one of the primary ingredients of the world’s finest and popular whiskies. The new capacity will help the company to build a strong relationship with the suppliers and be a part of their choice across Scottish distilled industries. The strategical positioning of both the Inverness and Arbroath facilities close to the key customers and good barley supply is a plus point. There has been reported a steady growth in the market for distilling malt in Scotland since 2004 as there is a global demand for aged whisky. As a result of this, it now becomes a long-term focus. Over the past 15 years in Scotland, the total number of distilleries which have increased is 29 in the count. Also, the production capacity of the large distillers has expanded. Keeping the above factors in mind, it can be expected that the company may provide support to the majority of the new capacity before any further construction takes place by entering into either new or extended long-term agreements. In order to fund the expansion, GrainCorp will take support from cash flow and existing debt facilities available across FY19-21. It is expected that the project might complete in calendar year 2021.  

For the half-year period ended 31 March 2018, the company has generated revenue worth A$1,986.8 million. The company made a profit of A$36.1 million. The company has a total asset worth A$ 4,091.8 million. And total liabilities worth A$2,217.7 million. This shows that the company has an ability to meet its long-term obligations. The current asset of the company is A$2024.5 million and total current liabilities are worth A$1,309.8 million. This shows that the company is able to clear its short-term obligations. The total shareholder's equity is worth A$1,874.1 million. The net cash outflow from the operating activities is A$39.3 million. There was a net cash outflow from the investing activities worth A$57.5 million. The major outflow of cash under investing activities was due to the payments done for the property, plant, and equipment worth A$50.4 million. The net cash outflow from the financing activities was A$0.8 million.

Throughout the journey of the company since listing, the stock performance was 32.7%. The company shows a negative performance of -2.15% in 1 year. During the period of 5 years, the company’s performance was -35.07% and 46.65% in 10 years. For the past 3 months now, the company’s performance is 7.05%. The current market price of the share is A$8.27 (up 0.85% on October 18, 2018) with a market capitalization of A$1.88 billion and PE ratio 26.28x. As per the stock trend, the moving average convergence and divergence line (MACD line) is below the signal line.

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