What powered GrainCorp (ASX: GNC) to triple 1H dividend, earnings

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What powered GrainCorp (ASX: GNC) to triple 1H dividend, earnings

What powered GrainCorp (ASX: GNC) to triple 1H dividend, earnings
Image source: © Kiosea39 | Megapixl.com

Highlights

  • GrainCorp delivered robust financial results on surging demand for Australian commodities.

  • GrainCorp’s board declared a total interim dividend of 24 cents per share.

  • The company’s international business also performed on a strong note.

GrainCorp Ltd (ASX:GNC) on Wednesday announced a three-fold dividend hike as the company posted record earnings for the half year ending 31 March 2022 (1HFY22). The integrated grain and edible oils business delivered robust financial results on surging demand for Australian commodities and favourable planting conditions.

GrainCorp’s board declared a total interim dividend of 24 cents per share, triple the interim dividend paid a year ago, which was 8 cents per share. It comprised a fully franked ordinary dividend of 12 cents per share, and interim fully franked special dividend of 12 cents per share.

By 10:10 AM (AEST), GrainCorp’s stock was trading at AU$10.59, up 0.28%. The stock has risen nearly 26% on a year-to-date (YTD) basis.

GrainCorp also tripled its earnings before interest, tax, depreciation and amortisation (EBITDA) to AU$427 million for the given period, up from AU$140 million in the prior corresponding period. Net profit after tax (NPAT) soared to AU$246 million from AU$51 million a year ago, GrainCorp said in its latest ASX filing.

GrainCorp’s international business also performed on a strong note, with a rise in contracted grain sales and strong export margins from Western Australia following a bumper crop.

The company ended the period with a robust balance sheet as it reported a core cash balance of AU$129 million, as of 31 March 2022. Net debt on 31 March 2022 was AU$2 billion, reflecting increased grain volumes at higher values.

What does the management say?

GrainCorp’s management is upbeat about the company’s prospects. “Global demand for Australian grain, oilseeds, and vegetable oils has remained elevated, after two consecutive bumper crops in east coast Australia (ECA) and during a period of tight global supply,” said GrainCorp CEO Robert Spurway.

“Recent weather patterns and continued La Niña conditions have provided excellent planting conditions for the 2022-23 winter crop to date, building confidence in grain supplies from east coast Australia and further supporting export sales and supply chain margins,” added Spurway.

GrainCorp’s FY22 guidance

GrainCorp also confirmed its FY22 guidance of underlying EBITDA in the range of AU$590 to AU$670 million, and underlying profit after tax of AU$310-AU$370 million.

“This outlook reflects the significant ongoing global demand for Australian grain and oilseeds and favourable planting conditions for the upcoming ECA winter crop,” the company said.

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