GrainCorp’s exports to China have not been disrupted by recent tensions in Australia’s relationship with the world’s second biggest economy, but the ASX-listed grain handler has almost doubled the number of its export markets to more than 50 over the past year under a diversification strategy.
GrainCorp boss Robert Spurway said the company had very close ties with its Chinese customers and its grain was competitively priced in most markets, which acted as a natural hedge against volatility in the Chinese or any other export market.
Exports will be vital to GrainCorp over the next year or so, with Australia’s eastern states now harvesting a grain crop that is expected to equal or better 2016-17’s record harvest of 29.2 million tonnes.
GrainCorp has already received about 3.9 million tonnes of grain this season, which is almost the same as it collected over the full course of last year’s drought-hit season. This year’s harvest could have about another two months to go.
“We’re seeing good demand across the globe for wheat and other grain products … Our international business, over more than 12 months as part of a diversification strategy (so not in response to geopolitical concerns), has done a very good job at broadening the number of markets we trade with and the size of our customer base,” Mr Spurway told The Age and The Sydney Morning Herald.
“It’s moved from somewhere in the order of 30 markets 12 months ago, to more than 50 as we sit here today, and over 340 high quality customers,” he said.
Some Australian exporters have run into serious problems when trying to get their product into China over the past fortnight or so. A shipment of live Western Australian lobsters was left stranded at a Chinese airport nearly two weeks ago, while some wine exporters have been told by Chinese importers that their wine would not clear Chinese customs, so they should not export it.
“We’ve got very strong customers in China and we work closely with them, and (with) Chinese and Australian authorities to make sure that any business we do with China meets their requirements and expectations,” Mr Spurway said.
“I’ve got confidence in the overall trading relationship. We’ve got people on the ground in China that work for GrainCorp, that are very closely aligned with supporting our customers there,” he said.
He was speaking after GrainCorp released its full-year result for the 2019-20 financial year, which ended on September 30.
GrainCorp recorded a $343 million statutory net profit, with the result boosted by cash from the sale of a liquid terminals storage business, the demerger of its malt business and a new insurance style contract that generates money during weaker grain harvests.
The bulk grain handler recorded a 3.6 per cent rise in revenue to $3.66 billion for the year, ahead of consensus Bloomberg forecasts of $3.32 billion. The $343 million statutory net profit compares to a $113 million statutory loss the previous year.
GrainCorp also declared its first dividend in two years, with a 7¢ fully franked final dividend, to be paid on December 10.
Morgans analyst Belinda Moore said while GrainCorp reported an underlying loss of $16 million, it recorded strong underlying growth in earnings and the resumption of dividends was a sign of board confidence.
“Importantly the outlook for financial year 2020-21 is much improved given good seasonal conditions,” she said.
GrainCorp shares closed down 1 per cent ay $3.95 on Thursday after lifting as high as $4.32.
Source: Thanks smh.com