It's an excellent result with the best features including how GNC says it will be busy for the remainder of 2023 - at least.
The increase in guidance is terrific and maintenance of the interim and special dividends pleasing, even though Oliver Twists would always want more. With this information one has to say that 'HC's' Portsmouth has been correct all along when he's claimed the SP is undervalued: he says by 20 per cent. I'll leave the financial wizardry to him and others, but 'Mr Market' has been unduly pessimistic.
The oilseeds division has been an expanding winner, while the recent increase in what has previously been a disappointing investment in spinoff UMG adds further.
Interest costs have risen faster than the inventory increase but that's hardly surprising given the continuing increases in the RBA's cash rate, with at least two more interest rate rises a certainty in my book. Some commentators disagree, but inflation doesn't appear to be under control, and with militant unions wagging the tail of socialist Federal and State Governments, a wages-price spiral is a possibility. The Federal Budget is stimulatory with the government refusing to tackle Oz's poor productivity per capita.
The rainfall map near the end of the presentation shows poor recent data for areas like Moreee in the northwest NSW grainbelt. However our valued contributors Portsmouth, stayer and TillLindemann may say it's more important to consider agronomists' findings given some areas up there enjoyed good rainfall earlier in calendar 2023, so soil moisture levels may still be very good.
Even if the winter 2023 harvest turns out to be patchy or just 'fair' rather than 'good' or better, diversified GNC will still be doing reasonably well.
But as of today it's boom times.
Harvests in USA and Europe may well be very good to excellent but the curve ball is how the 'safe passage' agreement for Ukrainian grain is looking uncertain from mid May if the limited number of media articles I've seen are factual.
We always need to remember GNC is a handler not a grower, and clips the ticket in numerous places.
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