Cashed up GrainCorp is set to build another canola crushing plant in Western Australia and is considering its sustainable aviation fuel market options after finishing 2022-23 with a $250 million profit and almost $350m in the bank.
After a big cropping season last year, the east coast grain handling, processing and marketing business will also reward shareholders with two dividend payments totalling 30 cents a share.
It has allocated a further $50m to buy shares back from shareholders, probably early next year after it banks another $104m, courtesy of the sale of its 8.5 per cent stake in United Malt Group.
While its statutory net profit after tax was less impressive than the prior year's record $380m - down 34pc - it was still an "outstanding result", according to managing director, Robert Spurway.
"Our exceptional balance sheet, with core cash of $349m, also provides us with the flexibility to return capital to shareholders, while continuing to pursue growth opportunities," he said.
The profit announcement comes hot on the heels of GrainCorp confirming it was significantly increasing its position in the livestock feed supplement market, spending $35m to buy XF Australia's Performance Feeds' three production plants and a stock nutrition consultancy service.
It has also just launched a feasibility study looking at the potential to be involved in sustainable aviation fuel production in Australia, with a future facility possibly being aligned with the new WA crushing plant.
The study is being conducted in partnership with Melbourne-based global institutional investment manager IFM Investors.
Mr Spurway noted about 75pc of Australian oilseed exports were already absorbed by the renewable fuel sector overseas, particular Singapore and the US.
"There's a real opportunity to onshore that industry and create jobs and skills here," he said.
"We expect a number of renewable feedstock fuel plants will eventually establish around Australia for different end users."
It was a matter of working out transport costs and other factors before deciding if these industrial-scale plants would be in the grainbelt or nearer to ports.
GrainCorp's oilseed processing division made a big $153m earnings contribution to the business' 2022-23 balance sheet last financial year, almost cracking 500,000 tonnes of crush throughput with its fifth successive year of improved performance.
Already Australia's biggest oilseed crushing business, with plants at Numurkah in northern Victoria and south of Perth, GrainCorp is anticipating spending "several hundred million dollars" building its new crushing facility.
No WA site has yet been chosen, but initial planning is underway for a plant with annual crush capacity of up to 1 million tonnes - more than twice that of the Numurkah site.
"This plant will be completely different to what we already do at our comparatively small Pinjarra plant in WA, which largely supplies the domestic meal market, such as the poultry industry, and oil consumers in Asia," he said.
There was "a great surplus of exportable canola" leaving WA every year, including crop sold by GrainCorp, which represented a big portion of its 3.7m tonne "international" grain trade in 2022-23.
The new oilseed crushing plant will be wholly owned by GrainCorp, but Mr Spurway would not rule out a potential joint venture partnership if options arose.
Likely vegetable oil supply chain markets and grain supply source partners were currently being lined up.
Construction may commence this financial year, but would take at least a year to complete, which meant no revenue was anticipated before 2024-25.
Mr Spurway said the oilseed expansion and the XFA stockfeed investment reflected GrainCorp's focus on strengthening the core of the business via targeted investments along the value chain.
"We have also further optimised our grain (receival) sites to provide improved service for growers, reducing truck turnaround times," he said.
Despite handling a big 37.4m tonne of winter and summer crop last season (slightly less than the previous year's 41m tonnes), improved receival and out-loading capacity across the Queensland, NSW and Victorian network meant grower truck delivery times were 7.5pc faster, or down to an average 43 minutes.
Total grain exports from GrainCorp's seven ports shrank almost 1m tonnes to 8.3m, but coincided with improved utilisation of its loading facilities to move 3.3m tonnes of woodchips, sand and other non-grain commodities (up from 2.5m).
"We're driving our assets harder, reducing the complexity of our business and increasing efficiency," Mr Spurway said.
Overall the agribusiness generated earnings before interest, tax depreciation and amortisation of $565m for 2022-23 (down from $703m) and achieved 18.6pc return on capital for the year.
Shareholder dividends payments, including a final 14c a share ordinary dividend and a 16c special dividend, will end the year totalling 67c a share, matching the 2021-22 payout.
However, not all parts of the business performed as strongly as hoped.
The company is strategically reviewing its Foods NZ oilseed processing division after writing down $19m against the business' East Tamaki factory following a "very competitive" year of food sector market challenges.
"We're looking at how to improve our position in a market where we have a right to win," he said.
Similarly, in Canada, GrainCorp's joint venture, Grains Connect's bulk handling business struggled with low volumes and margins, largely because of drought.
Although this year's performance was expected to improve, "we still have some work to do into the future".
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