GrainCorp confirms tough year

A relatively lean harvest result in NSW and Queensland last summer created tough conditions for the company's grain logistics and trading operations, cutting earnings to $235m, compared to the previous year's September 30 earnings before interest tax depreciation and amortisation (EBITDA) of $293m.

"As outlined earlier this month our grains businesses faced a tougher year with lower throughput volumes for storage and logistics and severely restricted opportunities for GrainCorp Marketing," said managing director Mark Palmquist.

"But solid performances from our processing operations have reduced the impact of the challenging conditions.

"Our processing businesses contributed approximately 85 per cent of our earnings in a year constrained by a much smaller crop in eastern Australia - a clear demonstration of the importance of our commitment to diversification."

GrainCorp's "measured" diversification strategy into new business areas, particularly its malt and vegetable oil operations, was providing "reliability and insulation from seasonal variability", with the company's malt position looking particularly upbeat in North America in 2015-16.

Mr Palmquist also anticipated "a return to more typical grain marketing patterns in Australia in the year ahead.

A statutory NPAT of $32m for the past year reflected the write-off of some assets, primarily at a de-commisioned malt storage site in Canada.

GrainCorp's final dividend takes the full year dividend to 10 cents a share - half last year's payout, and just over half of the company's underlying NPAT.

Dividend payment ratios over the past five-year period have averaged 61pc of NPAT, in line with GrainCorp's dividend policy of paying 40-60pc of NPAT through the business cycle.

Mr Palmquist conceded trading conditions were likely to remain "challenging" next year because of a "very low" 1.6m tonnes of carry-over grain stocks in its storages and another smaller crop this summer likely to limit eastern Australian export opportunities.

However, the company's malt operations were strong, with strong forward sales of capacity, strong growth in the North American craft beer sector and continued incremental benefits from strategic projects.

"We also expect continued improvements in the performance of GrainCorp Oils thanks to the stabilisation of refining volumes and partial contributions from our Liquid Terminals projects and our consolidated oilseeds crushing and refining footprint," Mr Palmquist said.

"GrainCorp Oils has performed well with higher crush volumes, and we have made good progress in the various expansion projects."

The business would also maintain a strong balance sheet to fund its improvement program.

Net debt gearing was at 37pc, and regardless of the company's investment activities, debt was not expected to exceed its target gearing range of 45pc when it peaked in the first part of next financial year.

GrainCorp also reported a improved safety performance, with a 46pc reduction in lost time injury frequency rate, an improvement on the 34pc reduction in the previous financial year.