Two consecutive bumper crops on Australia's east coast and increased demand caused by the war in Ukraine has resulted in record earnings for ASX listed grain handler GrainCorp.
Net profit for the six months to March 31 was up 382 per cent to $246 million, as revenue rose 49.9 per cent to $3.8 billion, with total grain handled rising from 30.4 million metric tonnes to 38 million.
"The numbers here speak for themselves - it is a record half-year result for GrainCorp, and a result that we're really proud of," managing director and chief executive Robert Spurway told analysts in a conference call on Wednesday morning.
"We've had excellent performance across all areas of the business."
He said the outlook for the 2022/23 crop currently being planted by growers across Australia looks very strong, with favourable soil-moisture conditions following months of wet weather.
The forecasts call for increased rain through August, which is great for growers on the driest populated continent on Earth.
"There are some isolated areas where it's probably a little wetter than growers would like," Mr Spurway said.
"But most growers I've spoken to have said that given the choice between drought and too wet, they'd said take too wet any day.
"It's certainly not likely to have a material impact on planting."
GrainCorp has a small trading team based in Kyiv, for originating grain to its international customers, Mr Spurway said.
The company has written off its small grain inventory there and is focused on doing what it can to support those employees, he said.
GrainCorp said its 15 staff had left Kyiv, and some had departed Ukraine. All report being safe.
The GrainCorp boss said while food hasn't been the subject of economic sanctions the war has disrupted supply chains, with very few if any exports coming out of the Black Sea at the moment.
"That is creating a gap between supply and demand around the world," he said. "It is also creating a sustained rally in commodity prices, and importantly for GrainCorp, creating an opportunity to meet that growing demand for grain around the world in a supply constrained environment."
While difficult to predict what's going to happen in the Black Sea, Ukrainian grain exports could be disrupted for years, given the ongoing hostilities and the damage to infrastructure in the country.
Graincorp will return some of its record profit to shareholders with a special dividend, as well as a previously announced $50 million share buyback.
It is also launching a venture capital fund that will invest $30 million over three years in start-ups in agricultural technology, animal nutrition and food technology.
"Activity and investment in agri-related venture capital has grown significantly across Australia and the Asia Pacific as a result of rising grower sophistication, evolving industry structures and emerging technologies," said Graincorp chief innovation and growth officer Jesse Scott.
For the full year, GrainCorp is forecasting an underlying net profit after tax of $310 million to $370 million.
GrainCorp shares, which hit a record high last week, were down 1.9 per cent to $10.36 at 1430 AEDT. They are up 25.4 per cent on the year, after nearly doubling last year.
GRAINCORP'S RECORD HALF YEAR
* Statutory profit up 382.4pct to $246 million
* Revenue up 49.9pct to $3.84b
* Fully-franked interim dividend 12cps vs 8cps, plus a full-franked special dividend of 12cps