News: GNC UPDATE 1-Australia's GrainCorp flags "disappointing" hit to grains business

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April 18 (Reuters) - Takeover target GrainCorp Ltd (GNC) on Thursday reported a A$40 million ($28.7 million) hit to half-year core earnings at its grains business, due to international trade tensions and a severe drought that wilted summer crops.

The disruption to grain trading conditions over the six weeks leading up to end-March had led to a deterioration of about A$40 million in expected earnings before interest, depreciation and amortisation (EBITDA), GrainCorp said in a statement.

"Clearly this is a disappointing outcome in a challenging period in international grain markets, compounded by the ongoing drought conditions in Australia," said CEO Mark Palmquist.

Market volatility and shifts in global grain flows due to a trade war between the United States and China have not been the boon once expected for grain merchants. China is Australia's largest trade partner.

Australia's biggest listed bulk grain handler also said ongoing drought conditions in eastern Australia "significantly" impacted summer crop production, especially sorghum.

Earlier this month, GrainCorp announced plans to separate into two, spinning off and listing its global malting unit and restructuring its grain business, whose earnings have been hit by drought.

The move came after little known asset manager Long-Term Asset Partners (LTAP) last year made a A$2.38 billion ($1.69 billion) takeover offer. GrainCorp said in March it was still engaging with suitors vying for parts or all of the company. ($1 = 1.3939 Australian dollars)