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Business Description: GrainCorp Limited (GNC) is an integrated grain business cross three grain activities: storage & logistics, marketing and processing. GNC supplies grain and processed grain products to customers in domestic and international markets, with a focus on wheat, barley and canola.
Strategy Analysis: GNC's strategy is focused on becoming a fully integrated agribusiness creating and capturing value along the grain supply chain. In storage and logistics the key objective is to leverage greater value from its extensive grain storage and handling facilities through supply chain efficiencies, better servicing the customer base and expansion of non-grain commodity activity. GNC continues to grow its marketing business both domestically and internationally and seeks to build a strong presence in international grain trading. In malt GNC seeks to improve efficiency, better leverage group marketing and procurement capabilities and build its capability in the fast growing craft brew market. Since acquisition of the malt business it has made some bolt-on acquisitions that have expanded capacity and further such acquisitions are a possibility. The oils business also offers further opportunities for both organic growth and bolt-on acquisitions. In the Allied Mills joint venture the strategy is to leverage value from the existing milling operations and pursue further downstream opportunities through expansion of its food ingredients product range. GNC has a growth and efficiency initiative in place whereby it targets $110m in additional EBITDA benefits by the end of FY16. The gains are derived from changes to the way it does business, asset optimisation and increased port flexibility.
Graincorp reported NPAT up 19.4% to $204.9m for the year ended 30 September 2012. Revenues from ordinary activities were $3.33bn, up 20% from last year, reflecting strong volumes across the group coupled with barley gains in Malt and a growing global reach in Marketing. Total up-country receivals during the year were 12.2Mt (2011: 14.9Mt) with 10.6Mt exported through GrainCorp Ports (2011: 8.1Mt). Grain in storage at the beginning of the year was 6.0Mt, an increase from 2.6Mt in the previous year. Grain in storage at the end of the year is 4.3Mt. Diluted EPS was 102.0 cents compared to 85.9 cents last year. Net operating cash flow was $140.0m compared to $304.8m last year. The final dividend declared was 20 cents, taking the full year dividend to 65 cents compared with 55 cents last year.
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