![GrainCorp managing director Mark Palmquist says the company is geared to capitalise on improved crop production this year. GrainCorp managing director Mark Palmquist says the company is geared to capitalise on improved crop production this year.](/images/transform/v1/crop/frm/5Q2j7ezUfQBfUJsaqK3gfB/7bc38614-ba80-4829-bd21-882bcdb248c8.jpg/r0_204_4000_2462_w1200_h678_fmax.jpg)
GRAINCORP full year profits dropped 3pc year on year, however the company was pleased with the result given the tough operating conditions and a smaller crop size for the company’s bulk handling business.
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Full year 2016 profits after tax were $32 million, down from $33 million in FY15 but in line with market guidance provided in February.
GrainCorp’s malt business was the star performer, according to managing director Mark Palmquist.
“Our diversified business model has allowed us to deliver a solid performance in the face of some significant external headwinds, with malt leading the way,” Mr Palmquist said.
A particular focus was the strong performance in the US market, where continued strong demand from the burgeoning craft beer sector helped boost earnings.
It has helped off-set tough years in GrainCorp’s oils and storage and logistics sectors.
“It was a challenging year for GrainCorp Oils with a difficult combination of reduced crush margins and suppressed demand for key products, increased competition from Europe for non-GM canola,” Mr Palmquist said.
On the storage and logistics front, he said a small carry-out combined with a ‘not great’ crop down the east coast, where GrainCorp has its receival network, made operating conditions difficult.
However, he said there were some positives, especially in terms of reducing cost and deliver efficiencies.
Key capital expenditure investments in the storage and handling sector include the new bulk liquid terminal capacity in Brisbane and Project Regeneration rail improvements.
In terms of the oils business, there has been work done on the company’s Numurkah and West Footscray sites.
The storage and handling network is expected to bounce back.
As of yesterday, GrainCorp had received approximately 1.5 million tonnes of grain into its network.
“We are expecting a return to a stronger year in FY17, driven by larger volumes and the operational efficiencies delivered in Storage and Logistics over the past two years, partially offset by new port competition.”
However, the world glut of grain is likely to keep pressure on the marketing sector.
“Conditions are likely to remain challenging for marketing, with ongoing competition from alternative supply origins, and a global oversupply of grain.”