GrainCorp Faces Margin Pressure but Commits to $50M Share Buy-Back

Strong Financial Performance Amid Industry Challenges

GrainCorp Limited has showcased resilience and strategic discipline in its FY24 Annual General Meeting, reporting an underlying EBITDA of $268 million and a net profit after tax of $77 million. Despite a tougher operating environment marked by lower Australian grain production and compressed global margins, the company maintained efficient operations and delivered consistent returns.

The East Coast Australia (ECA) network handled 28.0 million metric tonnes of grain, down from 37.4 million the previous year, reflecting the impact of a dry northern Australian crop offset by better conditions in Victoria. Meanwhile, the Nutrition and Energy segment saw record oilseed crush volumes of 540,000 tonnes, supported by the integration of XF Australia, which bolstered animal nutrition sales volumes.

Capital Management and Shareholder Returns

GrainCorp’s robust financial position is underscored by a core cash balance of $337 million at year-end. The Board declared a fully franked final dividend of 24 cents per share, bringing total dividends for FY24 to 48 cents per share. Additionally, the company returned $27 million to shareholders through an on-market share buy-back during the year and announced a new $50 million buy-back program, signaling confidence in its balance sheet strength and commitment to capital discipline.

Strategic Refresh and Growth Initiatives

The company’s refreshed strategy, anchored by the pillars Enhance, Expand, and Evolve, aims to drive sustainable growth and earnings resilience. GrainCorp is leveraging advanced analytics to optimise asset utilisation and labour planning, while diversifying earnings through its ports strategy and acquisitions in animal nutrition. The acquisition of XF Australia has already increased average earnings through-the-cycle by $10 million, reflecting the success of disciplined expansion into adjacencies.

GrainCorp is also exploring renewable energy opportunities, exemplified by a Memorandum of Understanding with IFM Investors and Ampol to develop a low-carbon liquid fuel supply chain, with a feasibility study underway and a potential FEED phase targeted for 2026.

Sustainability as a Core Business Driver

Sustainability remains integral to GrainCorp’s vision. The company achieved a 5% reduction in greenhouse gas emissions per tonne at processing sites and submitted near- and long-term emissions reduction targets to the Science-Based Targets initiative for validation. The launch of GrainCorp Next aims to establish an end-to-end low-carbon supply chain for Australian grains and oilseeds, positioning the company and its growers as leaders in sustainable agriculture.

GrainCorp also received endorsement for its Innovate-level Reconciliation Action Plan and completed modern slavery due diligence in high-risk sectors, reinforcing its commitment to responsible sourcing and community engagement.

Outlook and Market Conditions for FY25

Looking ahead, GrainCorp forecasts underlying EBITDA between $270 million and $320 million and net profit after tax ranging from $60 million to $95 million for FY25. The outlook reflects ongoing global supply pressures and subdued demand from key import regions, which are expected to moderate margins. The company anticipates continued strong oilseed crush volumes but at lower average margins due to a below-average Victorian canola crop and softer global prices.

GrainCorp’s strategic asset base and balance sheet strength position it well to navigate market uncertainties and capitalise on emerging opportunities, including its business transformation program aimed at unlocking $20-30 million in annual benefits.

Governance and Board Changes

The AGM also addressed governance matters, with the re-election of Chairman Peter Richards and Director Clive Stiff, who chairs the Sustainability Committee. The Board acknowledged the retirement of Director Nicki Anderson, noting the impact on gender diversity and reaffirming its commitment to inclusion through ongoing renewal and succession planning.

Overall, GrainCorp’s FY24 AGM highlighted a company balancing operational discipline, strategic growth, and sustainability leadership, setting a foundation for resilient performance in a complex global agricultural landscape.