SYDNEY (Reuters) — Australia’s GrainCorp Ltd. said on Friday its 2015 full-year earnings are expected to hit a five-year low as drought along the east coast curbs grain production, knocking its shares lower.
The country’s largest bulk grain handler updated investors on its outlook in the wake of a prolonged dry spell that has wilted a large portion of crops along the east coast, GrainCorp’s traditional stronghold.
The company said it expected earnings before interest, tax, depreciation, and amortization of US $187 million to $211 million for the year to end-June, as much as 18 percent below last year’s earnings.
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On average, 13 analysts polled by Reuters had forecast earnings of 217.9 million. Earnings in line its forecast would be the company’s weakest result since 2010.
“The big issue here is the short crop,” GrainCorp chief executive Mark Palmquist said on a phone briefing.
“It is about how much revenue you can generate and that is based upon volumes. It is not just the size of the crop but how big that exportable surplus is, that is what drives the activity through our ports.”
Wheat production in Queensland and New South Wales fell nearly six percent in the 2014-15 season from the previous season, data from Australia’s official commodity forecaster shows.
Palmquist highlighted some brighter signs for the country’s summer crop, with production of sorghum in the 2014-15 season pegged at 1.785 million tonnes in Queensland and New South Wales, up more than 65 percent on last year.
However, he cautioned that the size of available exports had yet to be determined.
