GrainCorp guides to major earnings upgrade amid unprecedented global demand

GrainCorp (ASX: GNC) was up 7.3% at the open after the grain exporter updated its FY22 underlying earnings (EBITDA) to $590-670m, up from the $480 – 540m range the company guided to on 7 February, while expected FY22 underlying net profit has also increased to $310-370m from $235-280m previously.

In addition to favourable planting conditions for the upcoming east coast Australian winter crop, managing director and CEO Robert Spurway also attributed an improved outlook to the significant ongoing global demand for Australian grain and oilseeds.

Spurway specifically noted the impact that disruption from the war in Ukraine is having on increased demand right now.

“The conflict in Ukraine and resulting trade disruptions in the Black Sea region have created uncertainty in global grain markets, with buyers looking for alternate sources of supply,” said Spurway.

“This has further increased both the demand for Australian grain and oilseeds and export supply chain margins.”

Supply chain resilience

At the AGM in February, GrainCorp noted that high global demand for Australian grain and oilseeds and strong supply chain margins for grain exports was being driven by two consecutive bumper crops in east coast Australia (ECA), coupled with supply shortages in the northern hemisphere.

“Recent weather patterns and continued La Nina conditions have provided excellent planting conditions for the 2022 winter crop to date, building confidence in grain supplies from ECA and further supporting export sales and supply chain margins.”

Despite recent weather-related supply chain disruptions across the ECA, the company has continued to operate its ports at close to full capacity, exporting as much grain as possible to international markets.

Spurway believes supply chain resilience demonstrates both the value of the company’s infrastructure assets and the capability of its operations and planning teams.

GrainCorp's share price has significantly outperfomed the ASX200 over the last 12 months.