EXPORTER GrainCorp believes strong demand for malt will boost its prospects for 2019.
The Australian business has just released its figures for the year ended 30 September 2018, with earnings before interest, tax, depreciation and amortisation were $269m, down from $390m in 2017 and underlying net profit after tax was $71m ($142m in 2017).
GrainCorp chairman Graham Bradley said they expected a further strong performance from the malt business, driven by continued strong demand for specialty malts used in craft and distilling.
“GrainCorp Malt will benefit from a full-year contribution from the Pocatello plant [in the US], and will also be working towards delivery of our $94m expansion of malting capacity at Inverness and Arbroath in Scotland, a project due for completion in calendar year 2021,” Mr Bradley said.
“This project will increase malting capacity in Scotland by almost 80,000 tonnes, supporting the strong distilling growth there. GrainCorp Malt also continues to expand its distribution capability in the United States, having recently opened a new warehouse in Florida and with more in the pipeline.”
Mr Bradley said growing conditions for grains had deteriorated since 30 September 2018, with year-to-date rainfall amongst the lowest recorded in the past century and most of eastern Australia in drought.
“This will further challenge GrainCorp to improve cost-efficiency and build on the substantial progress made through actions taken by the business over the last four years to improve its underlying performance,” he said.
“These actions include integration of the former Storage & Logistics and Marketing business units in 2017, which was a fundamental change to our operating model, simplifying the operating structure, streamlining the network and other operational changes to reduce costs.”
Mr Bradley said the company had entered into improved rail supply arrangements to substantially eliminate ‘take or pay’ obligations and minimise associated fixed costs.