GrainCorp profit withers in east Australia drought, challenges ahead

FILE PHOTO - A silo bearing the logo of GrainCorp Ltd, Australia's largest listed grain handler, is seen in the Tasmanian town of Devonport, Australia, November 17, 2016. REUTERS/Clyde Russell

(Reuters) - GrainCorp Ltd GNC.AX, Australia's largest listed bulk grain handler, said on Thursday its annual underlying net profit fell 50 percent, hurt by the drought in the eastern states.

The company said underlying net profit came in at A$71 million ($51.37 million) for the year to Sept. 30, down from A$141.6 million the previous year and within the company’s forecast range of A$60 million to A$75 million.

The company warned of a severe decline in eastern Australian grain production in fiscal 2019 due to dry weather conditions and said it expected production to be skewed to Victoria and southern New South Wales states. It said conditions would remain challenging.

Australia’s agricultural commodities forecaster warned in late October that the devastating drought was expected to cut the east coast’s crop production this year to less than half its average over the past 20 years.

GrainCorp said earlier this month it planned to cut jobs at its eastern Australia grains unit after the drought severely hampered the region’s grain harvest.

Shares of the company had fallen more than 3 percent this year by Wednesday’s close.

The board declared a final dividend of 8 Australian cents per share for the period, down from 15 Australian cents last year.

Reporting by Ambar Warrick and Aby Jose Koilparambil in Bengaluru; Editing by Sandra Maler and Paul Tait