Shares of GrainCorp (ASX: GNC) drop on revised outlook for FY24

May 06, 2024 03:31 PM AEST | By Team Kalkine Media

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Shares of GrainCorp (ASX: GNC) drop on revised outlook for FY24 — Image source: Pixabay

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GrainCorp (ASX: GNC), the Australian commodity trader, witnessed a significant downturn in its share price, experiencing a sharp decline of 4.10% to AU$8.06 apiece on 6 May 2024. This plunge marks the largest intraday percentage drop since 14 February.

The company issued a downward revision of its fiscal year 2024 (FY24) earnings before interest, taxes, depreciation, and amortisation (EBITDA) outlook, now forecasting it to be in the range of AU$250 million ($165.25 million) to AU$280 million. This adjustment comes in contrast to the previous guidance of AU$270 million to AU$310 million.

Furthermore, GrainCorp has slashed its FY24 underlying net profit after tax (NPAT) outlook, revising it downward to a range between AU$60 million and AU$80 million, down from the prior projection of AU$65 million to AU$95 million.

The company cited softened operating conditions and a subdued outlook leading into the second half of FY24 as contributing factors to the downward revision. Additionally, GrainCorp reported weaker-than-expected margins and volumes for the month of April.

GrainCorp anticipates reporting an EBITDA of AU$164 million for the first half of FY24, a significant decline from the previous year's figure of AU$383 million. Similarly, the company expects its underlying NPAT for the first half to reach AU$57 million, a stark decrease from the AU$200 million reported in the corresponding period last year.

Despite the recent downturn, GrainCorp's stock had shown resilience earlier in the year, posting a notable gain of 15.4% year-to-date as of the last close.

The news of GrainCorp's lowered earnings outlook and weakened operating conditions has had a substantial impact on investor sentiment, reflected in the sharp decline in its share price. Investors are closely monitoring the company's performance and await further updates on its strategies to navigate through the challenging market conditions.

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