• Underlying EBITDA: $268 million for FY24.
• Underlying Net Profit After Tax: $77 million for the year.
• Core Cash Position: $337 million.
• Capital Management Initiatives: Over $130 million returned to shareholders, including buyback and dividends.
• Total Dividends: $0.48 per share, fully franked.
• Oilseed Crush Volumes: Record 540,000 tonnes.
• Winter Grain Production: 23.5 million tonnes, down from 29.9 million tonnes in FY23.
• Animal Nutrition Contribution: $6.5 million in six months post-acquisition of XF Australia.
• Crush Volumes Increase: 9% increase to 540,000 tonnes.
• Net Debt: Reduced to $99 million.
• Final Dividend: $0.24 per share, fully franked, including $0.14 ordinary and $0.10 special dividend.
• Receivables Year-to-Date: 5.8 million tonnes.

• Warning! GuruFocus has detected 4 Warning Sign with AOCIF.

Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Graincorp Ltd (GRCLF) reported an underlying EBITDA of $268 million for FY24, demonstrating strong financial performance.
• The company achieved record oilseed crush volumes of 540,000 tonnes, indicating operational efficiency and growth in the Nutrition and Energy segment.
• Graincorp Ltd (GRCLF) completed the acquisition of XF Australia, contributing positively to its Animal Nutrition portfolio and increasing through-the-cycle earnings to $320 million.
• The company maintained a strong balance sheet with $337 million in core cash, providing flexibility for future growth opportunities.
• Graincorp Ltd (GRCLF) declared a total dividend of $0.48 per share, reflecting confidence in its financial health and commitment to shareholder returns.

Negative Points

• Graincorp Ltd (GRCLF) faced lower production and grain handle volumes due to challenging conditions in Northern Australia, impacting overall margins.
• The Nutrition and Energy segment experienced a reduction in crush margins in the second half of FY24 due to lower global vegetable oil values and reduced canola seed supply.
• The company incurred a $10 million impact from the closure of its underperforming New Zealand Foods business at East Tamaki.
• Global grain production conditions led to competitive pressure on margins, with no major concerns about supply but no bumper crops to drive demand.
• The transformation program, aimed at unlocking efficiencies, involves significant investment with expected benefits not fully realized until FY27.

Q & A Highlights

Q: Can you provide clarity on the Nutrition and Energy segment's second half EBITDA and the impact of the East Tamaki closure costs on future earnings? A: Ian Morrison, CFO: The second half EBITDA is close to what we expect moving forward, with some noise from one-off costs like the East Tamaki closure. Typically, the first half is stronger due to harvest timing and seed availability. More details are in the appendices of the presentation.

Q: What are the total expected costs for the transformation program, and when will the $20 million to $30 million EBITDA benefit start to materialize? A: Robert Spurway, CEO: The total cost is expected to be more than $90 million to $100 million, with the business case for Release 2 still in development. The EBITDA benefit should start ramping up in FY26, with full benefits expected by FY27.

Q: How are current margins in the Nutrition and Energy business, and are they at mid-cycle levels? A: Ian Morrison, CFO: Current margins are around mid-cycle levels. We saw strong margins in 2022 and 2023, but they have moderated. The fundamentals remain strong, and we expect typical margins moving forward.

Q: What is the outlook for the Victorian canola crop, and how might it affect seed pricing? A: Robert Spurway, CEO: The Victorian canola crop is forecasted to be down 25% year-on-year, which may increase seed prices due to longer transport distances. However, oilseed prices are not as high as a couple of years ago, and oil prices are also up, balancing the market dynamics.

Q: How does the global grain production outlook, particularly regarding Ukraine, affect GrainCorp's margins? A: Robert Spurway, CEO: The impact of the Ukraine conflict is already factored into current production levels. Ukraine has maintained grain movement through alternative channels. Global supply is stable, with no major disruptions, and demand remains strong, particularly in the Agri-Energy sector.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.