SYDNEY, AUSTRALIA — GrainCorp Limited increased its underlying EBITDA to A$310-330 million for fiscal year 2021 from its previous estimate of A$255-$285 million. 

The company said it will report its final results on Nov. 11. The upgraded earnings are subject to several market variables including the timing of grain exports, the strength of the new crop and prevailing weather conditions. 

The heightened demand for Australian grain has boosted the agribusiness segment, said Robert Spurway, managing director and chief executive officer. 

“We are pleased to upgrade our FY21 earnings guidance, which reflects the strong performance of our east coast Australian (ECA) grains business, following the bumper 2020-21 harvest,” he said. “Post-harvest winter receivals and higher summer receivals, coupled with a favorable outlook for the upcoming winter crop, have supported strong export volumes, forward contracted sales and supply chain margins.

“We’re seeing excellent demand for high quality Australian grain, particularly with recent weather-related crop production challenges in the northern hemisphere, and July delivered our biggest month of contracted sales on record.”

The company expects to see total exports for FY21 at the higher end of previous expectations (7.0-8.0 million tonnes) and as a result of higher-than-expected summer crop receivals, grain carry out at Sept. 30 is also expected to land at the high end of the range (3.5-4.5 million tonnes).

“It is also great to see the benefits of our significant capital investment in prior years, and the full delivery of our operating initiatives, flowing through our network,” Spurway said. “I want to acknowledge the hard work of all our ECA teams in achieving these strong returns and in their continuing preparations for the upcoming harvest.”

Turning to the company’s processing business, Spurway noted that it also continued to perform well.

 “Global demand for vegetable oils remains elevated and this is supporting value across our oils portfolio, ensuring high utilization of our oilseed crush facilities and strong crush margins.”

Spurway confirmed GrainCorp is preparing for the upcoming winter harvest with a strong maintenance and capital investment program. He noted that total FY21 capex was expected to be approximately A$55 million, including approximately A$50 million of sustaining capex.

He also confirmed that this increase, relative to the company’s sustaining capex target of A$35-$45 million, is due to the additional storage capacity and other upgrades to the ECA network being made in preparation for another large crop in FY22.

“We’re hearing reports of good potential in the upcoming crop, based on factors including area planted, sub-soil moisture levels, season-to-date rainfall, and longer-term weather forecasts,” Spurway said. “Currently, our teams are working to ensure our network is equipped to handle the new crop at the right time, and in the right locations.

“Our supply chain is executing a heavy outload program on road and rail, moving grain carried from the last winter crop harvest either domestically or overseas. We are building 1 million tonnes of new storage capacity in time for harvest and re-opening ‘flex’ sites to accommodate the anticipated demand. We’re also recruiting over 3,000 harvest casuals to help manage that demand across 160 up-country sites and ports.”