Stock of the day: GrainCorp

(AI video summary)

This video was created on 15 May 2025 for IG audiences by ausbiz.

ASX code: GNC

GrainCorp boosts returns on strong northern performance

GrainCorp has declared a special dividend and increased its share buyback after posting a $58 million first-half (H1) profit, up from $50 million year-on-year (YoY). Strong volumes in Queensland and Northern New South Wales offset below-average conditions in Victoria and Southern New South Wales.

Financial outlook strengthens

GrainCorp has upgraded its full-year (FY) underlying earnings guidance to between $285 million and $325 million. Shareholders will receive a $0.14 interim dividend plus a $0.10 special dividend, both fully franked. The company has also increased its on-market share buyback by $25 million to $75 million total.

Agricultural investment challenges

Despite positive results, GrainCorp's canola crush margins were weaker than expected. Chief executive officer (CEO) Robert Spurway addressed tariff concerns, stating that while global food demand remains stable, trade flows can be disrupted. He maintains GrainCorp is well-positioned to manage these challenges.

For investors, agricultural companies present unique challenges due to weather dependency and commodity price volatility. GrainCorp's earnings per share (EPS) history illustrates this unpredictability:

• 2017: $0.60 
• 2018: $0.12
• 2019: -$0.15 
• 2020: $0.24
• 2021: $0.31
• 2022: $0.10

While analysts maintain a 'hold' rating, some investment teams classify it as 'avoid' due to unpredictable long-term earnings, despite the company's essential role in the global food supply chain.