The Queensland floods have not dampened the profit projections of grain handlers GrainCorp, which is on track to enjoy more record earnings this financial year.
GrainCorp on Thursday announced full-year earnings expectations in-line with last year’s bumper season.
It forecast a net profit of $165 million to $185 million for 2011/2012 and earnings before interest, tax, depreciation and amortisation of $350-$380 million.
The upbeat forecasts follow the record $172 million net profit GrainCorp enjoyed in 2010/11 thanks to an unprecedented eastern Australian crop.
Shareholders were impressed, sending the stock 23 cents, or 2.9 per cent higher, to $8.10 at 1400 AEDT despite an overall gloomy market.
GrainCorp CEO Alison Watkins said she expected only modest grain losses in the flood-affected parts of Queensland due to the timing of the deluge.
The winter crop was unaffected by the rain and assessments were being made in flood-stricken areas.
But as most storage facilities were sealed, water penetration was expected to be minimal.
“We’re not concerned about significant losses,” Ms Watkins told reporters.
The 2011/2012 season had so far produced a smaller crop than at the same time a year ago, but Ms Watkins said the grain quality was higher.
Workers had also been kept busy in the first part of this year exporting carry-over from the last season.
“We are confident we should deliver a year that is somewhere in the order of the kind of year we had, the extraordinary year we had, in 2011,” Ms Watkins said.
Grain exports for 2011/2012 were expected to be between 8.8 and 9.8 million tonnes, up from 8.1 million tonnes last year.
“In the first quarter of this financial year our ports were kept very busy exporting the previous year’s grain where as in a normal year the first quarter can be quite quiet until the new season comes in,” Ms Watkins said.
Meanwhile, GrainCorp has turned around its problematic malt business.
The company forecast it would sell 1.3 million tonnes of malt at an average of $70 per tonne, up from 1.1 million tonnes in the previous year.
The company acquired a malt business in Germany, extending its reach to Europe, and a small malt house in Western Australia.
Malt earnings were down 16 per cent in 2010/11 because of a drop in beer consumption in developed nations.
Ms Watkins said the company would focus on tapping into developing nations and the US craft beer market.
“The consumption of beer by volume has been trending flat to down in developed nations,” she said.
“The good news is while there’s a reduction in quantity there’s a shift to quality, we’re seeing a great consumption of craft brewing.”
In the US the craft segment is bigger than the entire Australian beer market, with craft beers using up to twice as much malt per hectare as mainstream beers.
“We’ve been focusing on that craft segment and have been very successful in developing that in the US,” Ms Watkins said.
