Release Date: May 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Graincorp Ltd (GRCLF, Financial) reported a strong first half performance with an underlying EBITDA of $202 million.
- The company upgraded its earnings guidance for financial year '26 to between $285 million and $325 million.
- Graincorp Ltd (GRCLF) declared total dividends of $0.24 per share, including a fully franked ordinary dividend and a special dividend.
- The company increased its ongoing share buyback from $50 million to up to $75 million.
- Graincorp Ltd (GRCLF) demonstrated strong operating metrics, including record crush volumes and growth in animal nutrition sales.
Negative Points
- The company faced weaker export margins due to stronger global production from major exporting markets.
- Graincorp Ltd (GRCLF) reported a loss of $10 million in its Canadian joint venture, highlighting ongoing challenges in that market.
- Crush margins were structurally weaker due to a smaller Victorian canola crop and lower global demand for vegetable oils.
- The business transformation program is expected to incur higher costs, with an additional $10 million anticipated in FY26.
- The company noted increased pressure on margins in the nutrition and energy segment, with a more pronounced weighting to the first half.
Q & A Highlights
Q: Can you clarify the costing and timing of the transformation program? Specifically, how much is being spent on release one and release two?
A: Broadly speaking, the spend is well locked in for the second half, with an increase of $10 million over previous advice applying in 2026. Release two is expected to be similar in quantum to release one, which is about $80 million cumulative. We've learned from release one to de-risk the program and are confident in delivering early-stage benefits following its completion. – Robert Spurway, CEO
Q: Do you expect crush margins to recover in the first half of 2026, or could it be a longer recovery process?
A: It's difficult to forecast specific margins. Factors impacting crush margins include dry conditions and lower crop yields in Victoria, as well as strong global supply of oil seeds. These factors will correct over time, but it's hard to predict when. Renewable fuel demand and policy support could also influence margins. – Robert Spurway, CEO and Ian Morrison, CFO
Q: Could you explain the timing benefit in the nutrition and energy division in the first half?
A: The timing benefit relates to crush margins, where hedging is used to manage exposure. This can lead to mark-to-market adjustments, which had a modest positive impact in the first half. This benefit could partially unwind in the second half, but it's not a significant feature. – Ian Morrison, CFO
Q: How do you expect the nutrition and energy business to perform in the second half compared to the first half?
A: Typically, there's a weighting to the first half, and this year it may be more pronounced due to timing benefits and increased pressure on margins. Visibility into Q3 crush margins is available, but conditions in Q4 and the new season crop will impact the final outcome. – Ian Morrison, CFO
Q: Has there been any impact or benefit from recent flooding in Southeast Queensland on your markets?
A: The flooding has improved soil moisture profiles, creating potential for an above-average crop in the region, which will impact next year. However, it's important to acknowledge the challenges faced by those affected by flooding. – Robert Spurway, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
