THE past five years of diversification into barley malting and oilseed processing have helped buffer GrainCorp's bottom line pain as drought and stiff new competition gnaw at its grain trading and logistics earnings.
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The big Australian agribusiness group recorded a 43 per cent drop in after-tax net profit to $50 million in the six months to March 31, but GrainCorp Malt and GrainCorp Oils divisions both delivered "consistent" result improvements.
Malt's earnings before interest, tax, depreciation and amortisation (EBITDA) rose $2m to $57m and the division's sites across North America, Europe and Australia have also run at high operational capacities.
Oils EBITDA lifted $3m to $36m despite continuing pressure on refining volumes.
While storage and logistics pre-tax earnings halved to $63m and marketing EBITDA was down $11m to $16, executive chairman Don Taylor said the grains division's performance was still 'very positive' given the lower crop volumes in northern NSW and Queensland and intense competition for the smaller harvest.
Grain receivals for the period shrank more than two million tonnes to 7.6m setting the scene for an underlying net profit for the 2013-14 year tipped to be down around $80m to $100m (prior to significant item deductions).
First-half shareholder dividends have been pruned to 15 cents a share, down from 20c for the same period last year.
Mr Taylor said while the current winter cropping season had started well particularly for canola plantings - thanks to timely pre-planting rain in many districts - it would be a long season and favourable finishing rain would be critical to the eastern Australian grain sector's success.
With many farmers still awaiting follow-up rainfall to confirm their full planting intentions, GrainCorp is also holding off confirming its own plans to close as many as 100 less efficient receival sites within its 280-strong Queensland, NSW and Victorian silo network.
Mr Taylor noted about 180 sites typically handled 90pc of Grain-Corp's storage receivals, partly because growers were lured to better price competition at these bigger depots and buyers could also easily fill orders at one storage site.
A decision on which sites will close is expected after mid-year.
GrainCorp managers have been talking with farmer representatives to highlight the challenges facing the grain logistics network's ageing infrastructure amid increasing port competition and a fast changing and high cost grain trading and handling environment.
"We need to take costs out of this business," Mr Taylor said.
He used the results announcement to again blast the equal access requirements on GrainCorp's port terminals and the company's inability to compete on an equal footing with unregulated ports.
Logistics group Qube Hold- ings and Singaporean commodities trading giant Noble Group last month teamed up with GrainCorp customers, Emerald Grain and Cargill, to build a rival export terminal at Port Kembla on the NSW South Coast.
Mr Taylor said Qube entered into the sort priority access deal with customers that GrainCorp was prohibited from making.
"I find it galling to be honest," he said.
GrainCorp owns seven of the 11 east cost port terminals and is regulated by the Australian Competition and Consumer Commission (ACCC).
It must treat all of its customers equally and cannot have special deals on pricing or shipping slots - preventing the company from offering its big customers specific services they may request.
Mr Taylor said it was "nonsense" that GrainCorp should provide "everything equally to everyone".
Farmer lobby groups such as NSW Farmers has campaigned fiercely to keep the open access arrangements unchanged.
