SYDNEY, AUSTRALIA — Strong performance in the company’s global malt business coupled with good progress in the foods unit led GrainCorp to raise its fiscal 2018 earnings guidance.

The company said it now expects underlying EBITDA in the year ending Sept. 30 to total $255 million to $270 million, up from an earlier forecast of $240 million to $265 million. Underlying NPAT also is expected to increase, with forecasts at $60 million to $75 million, up from $50 million to $70 million.

“The benefits of our diversified business model are again being demonstrated in the face of the substantial drought challenges in eastern Australia,” said Mark Palmquist, managing director and chief executive officer. “These conditions have slowed export volumes as farmers and the domestic market move to secure supplies.”

Despite the strength in malt and oils, GrainCorp said its grains business has experienced ongoing challenging operating conditions in Eastern Australia during the second half of the year.

“The growth of GrainCorp’s origination footprint has continued, with the commissioning of the second of four GrainsConnect Canada sites in June 2018 and the opening of a Black Sea trading office in Kyiv, Ukraine, also in June,” the company said. “In eastern Australia the 2017-18 crop was below average and skewed to the south, restricting exports. Despite the tightness in supply, GrainCorp benefited from the integration of its storage and handling and trading businesses prior to harvest, which helped in achieving a higher share of domestic grain trade and ex-farm grain origination.”

GrainCorp said that cropping conditions across the east Australian grain belt have “deteriorated substantially” since the company issued its half-year results on May 11. Large areas of New South Wales and Queensland have experienced severe drought in recent months.

 “We expect a considerable decline in grain production in eastern Australia in FY19 with production again skewed to Victoria and southern New South Wales,” Palmquist said. “We continue to respond to the deteriorating outlook by adapting the network to better match the size and location of the crop and keeping a strong focus on operating cost control, asset utilization and disciplined capex allocation.

“It is an extremely challenging time for our grower customers. Many of our own people live and farm in these communities and we keenly feel the difficulties they are going through.”