GrainCorp Limited (GNC) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the GrainCorp Limited FY '26 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Robert Spurway, Managing Director and Chief Executive Officer. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us. Just as we get underway and first up, I'd like to acknowledge the Gadigal people of the Eora Nation for those of us presenting to you here from Sydney. We pay our respects to their leaders, past and present. Just at the front of the pack, you'll see today's agenda. I shall take you through a financial year '26 overview. We'll talk about the financial results, which Ian Morrison, our CFO, will also detail, including the strength of our balance sheet and capital management outcomes. We'll provide an update on strategy, and I know everyone is always looking forward to our view on the outlook and the way Harvest is progressing. So you'll hear from me over the next number of minutes and then Ian Morrison as well. Before we start, though, I did just want to also acknowledge that you will have seen from our announcement earlier that we have begun a CEO succession process at GrainCorp. As I approach 7 years in the role, the Board and I agree that it is the right time to look for my successor and indeed for me to look for new opportunities ahead. Importantly, I want to be really clear that this is a succession announcement, and I will be continuing to lead GrainCorp as part of an orderly transition. It is very much business as usual, not just for me, but the entire management team as we focus on executing our priorities and keeping the business performing strongly. Just for a moment, though, as I reflect on nearly 7 years at GrainCorp, it has been a great privilege to lead this iconic Australian company with a global reach. I'm enormously proud of the GrainCorp that it is today and the more resilient and diversified business we are. And I'm also extraordinarily proud of the team's accomplishments in my time as CEO. I'm hugely confident about not just the strength of GrainCorp, but its ability to thrive into the future. At that, I want to move to the business of today, which is a review of financial year '26, our strategy and the outlook ahead. For those following online, I will remind you from time to time the page we're on. So starting at Page 5 on the executive summary. In line with our guidance, we have delivered financial year '26 underlying EBITDA of $223 million, and we have a strong closing balance sheet with core cash of $171 million. As we said earlier in the year, both at the AGM and at the half year, we have seen a year with surplus global grain production, resulting in lower commodity pricing and a reduced willingness by the grower to bring grain to market. That has created below-average margin opportunities, not just for us, but global peers as well. In that environment, we've maintained a focus on disciplined execution and ensuring that we do well, controlling what we can. In that respect, we've delivered $12 million in early-stage run rate benefits from the group-wide transformation program. We provided an update when we reaffirmed guidance back in September. And I'll be delighted to talk later in the presentation about the continued expansion and results we've seen in both Bulk Materials and Animal Nutrition. So real momentum in the business in that respect. I'll obviously expand on the outlook view, but I'd like to say right at the start that the financial year '27 harvest activity is now accelerating very strongly. We've had recent rainfall, which will be very supportive of the summer crop planting in northern regions and, of course, finishing yields in the South. So we're well placed and more on that shortly. Turning over to Page 6. Ian will take you through these details, and I think the numbers tell the story here, and you can read them faster than I can take you through them all. I've already touched on the underlying EBITDA and the core cash. The Board today has also declared full year dividends of $0.28 per share, fully franked, reflecting our ordinary dividend policy and capital management policy. The bottom line of this chart, there's 3 numbers on the right that are really critically important to me and are the ones that we have committed to and continue to demonstrate our ability to drive performance. Over several years now, we lifted our crush throughput forecast and have continued to maintain over 550,000 tonnes. So very strong results across our crush business and GrainCorp Nutrition and Energy. Again, we've lifted our bulk materials handled now at 3.1 million tonnes, and we've lifted significantly our Animal Nutrition sales volume, not just through the acquisition that we made a couple of years ago now, but ongoing relatively modest investment in the business as we leverage our capabilities and find new opportunities to grow in that market. Moving to Page 7. Some details we've touched on a couple of times throughout the year and particularly on the left-hand side, the global chart for wheat production and demand. I think really importantly, you can see here the strong trend for ongoing growth in demand. So that's really compelling. Back at the AGM in February, I presented this chart that also showed though that there has been a peak in production exceeding demand in 2026. And that's through the very unusual circumstance that there were no disruptions of any nature in the major global production areas. So if you look back historically, there's nearly always one area or another that has drought or some other sort of impact. The resultant impact of that cyclical oversupply of grain in the year is the flat and relatively low prices from a grower point of view, which created a challenge for all operators in the grain industry globally to produce a margin. The chart on the right-hand side demonstrates that. You'll also see though, over the latter part of '26 that we have seen some growth in grain prices, and that is encouraging. That's largely driven off uncertainty and indeed disruption to Black Sea export capacity. Just recently, I read that the USDA is suggesting that there might be about a 12.5 million tonne shortfall from that region, and it just highlights the volatile times that we operate in and actually the opportunity that, that creates for GrainCorp and our confidence in the year ahead. We turn over the page to Page 8. We have, in that environment, continued to execute our priorities and ensure the business remains resilient. Over the next few slides, I'll expand on some of the summaries here. But if you look at the 3 areas that we identified as priorities, cost management, capital discipline and portfolio optimization, we've delivered meaningful progress and initiatives against all of those areas. We've completed and implemented the East Coast Australia operating model review in the second half. We've maintained a steady underlying corporate cost despite the inflationary environment, so continue to build credibility around our cost management over multiple years. We have focused our investments in delivering volume and earnings growth in Animal Nutrition. I'll reflect on that shortly. And we've completed the year with a very strong balance sheet and $171 million in core cash. As far as portfolio optimization goes, we talked earlier in the year about the completion of the sale of the GrainsConnect Canada business. And again, it shows our conviction to doing what's right for the business over the longer term and ensuring that we've got a platform not just for continued growth, but continued return of benefits and value to shareholders. In a word, we're doing what we said we would. On Page 9, just looking at our health and safety statistics for the year. Despite broadly flat injury rates, we have made good progress on our health and safety and environment management systems improvement and indeed, risk reduction generally. We do strive for zero harm every day, and that's embedded in one of our core values of the 4 values we have, we stay safe, and that's an ongoing commitment for our people and partners, not just across Australia, but across other parts of the world that we operate in. On Page 10, we provide a summary of the sustainability initiatives completed through the year. In the left-hand column there, you'll see that we are now in year 2 of our Science Based Targets initiative and we've reduced our operational emissions by 9.5% against the '22 base year. We're also in our first year of publishing our mandatory climate-related reporting under the AASB standards. And we're proud to be a member of the Climate Leaders Coalition, where we've led and participated in 3 working groups addressing specific climate opportunities to our sector and our customers. That's reflected also in the middle column. And I'd describe here without going through all the initiatives, we really importantly look at this as an end-to-end opportunity for our growers and customers, connecting what we can achieve on farm through our business with customer outcomes. We've seen growth in our involvement in the GrainCorp Next initiative, which drives a low-carbon canola supply chain and we have a small-scale barley pilot working with customers. So really bringing it to life and making our commitments real and delivering progress into the future. We're also proud of the role that GrainCorp plays in the communities that our people live and work in and the areas that our growers live and work. We're proud of our Reconciliation Action Plan and our second Innovate plan in that respect. The Community Foundation continues to support communities and the people that we work with. I'm going to hand now to Ian Morrison, our Chief Financial Officer, who will talk through the detailed financial and segment performance. Thanks, Ian.

Thanks, Robert, and good morning, everyone. So on Slide 12, just turning to FY '26 financial performance. So I'll step through the headline segment results here before going into a bit more detail on each of these. At a headline level, Agribusiness underlying EBITDA was $156 million compared with $218 million last year. So as Robert was touching on earlier, lower margins and tons handled across our East Coast Australia business were a feature, and that was partly offset by stronger international performance. In Nutrition and Energy, a stronger second half saw us deliver EBITDA of $96 million, and that's compared with $117 million in FY '25. Lower Human Nutrition earnings in the segment were partly offset by an improved Animal Nutrition contribution. As Robert touched on before, underlying corporate costs have been held flat, and those are at $25 million. The reported result you see on the slide here of $29 million, that includes $4 million of project-related costs as we continue to pursue the opportunity in renewable fuels feedstocks. I'll cover more details on each of the 3 segments shortly. But just to round out this slide, note the business transformation costs of $37 million and also the loss on exit from GrainsConnect Canada of $16 million, and both of those are excluded from underlying EBITDA. Depreciation and amortization was $117 million, slightly below FY '25 and net interest was $65 million compared to $60 million last year. Now turning to Slide 13 and East Coast Australia. As Robert touched on earlier, this year's result in ECA was impacted by those strong global grain production numbers touched on earlier. And that led to low market pricing, particularly at harvest time, and that reduced grower incentives to bring grain to market. Now that had an impact both on our tonnes handled and also margins. In terms of the key operational metrics, which you can see detailed on the right-hand side here, receivables were 12 million tonnes compared to 13.3 million tonnes last year and exports of 5.9 million tonnes against the 7 million tonnes in FY '25. Overall, total grain handled was 28.6 million tonnes, down from the 31.6 million tonnes last year. It was pleasing to see continued strong performance of our Bulk Materials business with an uplift in volumes handled year-on-year. A couple of items just to note as well in terms of features in the ECA results. Firstly, the result includes a $7 million impact from the Crop Production contract. No further cash payment was made under the contract as the payment cap has been reached and that $7 million largely represents the annual premium. Also just to note, the result includes $5 million of one-off costs associated with the operating model changes we flagged back in September, which were completed in the second half of FY '26. I'll now just move over the slide on to Page 14 and our international business. The underlying result for International improved by $25 million year-on-year, and that's recovering from a modest loss in the prior year. We achieved record sales volumes in international in FY '26, and that was off the back of the record crop we saw in WA of 27.2 million tonnes. That crop was 18% above the prior year and around 50% above the 10-year average. So really strong crop conditions over in the West. Margins improved from the lows we saw in FY '25 towards through the cycle levels, and that's really supported the stronger contribution from our international business. And as I touched on before in terms of the one-off impacts, we did complete the sale of our 50% interest in GrainsConnect Canada in the second half following the strategic review we talked about previously. I'll now move to our Nutrition and Energy business and Human Nutrition, first of all, on Slide 15. Our canola crush facilities continue to execute well with 553,000 of seed crushed in FY '26. And in particular, we saw really strong performance in the second half from our crush plants. Full year crush margins were broadly in line with FY '25, just ever so slightly below, but they did remain well below through-the-cycle levels. This reflected a smaller ECA canola crop last year and those strong global oilseed production conditions with many of the same market dynamics that impacted our ECA business and in particular, the margins also impacting crush. Edible oil sales volumes were lower at 192,000 tonnes, and that's just reflecting some softer customer demand for bulk oils that we'd also touched on at the half year results. And just noting the increased CapEx in Nutrition and Energy in FY '26, that included $13 million we've invested this year in the edible oils refining upgrade at West Footscray with that upgrade due to complete in fiscal year '27. I'll just now move on to Slide 16 and Agri-Energy and Animal Nutrition. First of all, Agri-Energy delivered a strong second half with record 6-month sales volumes as both volumes and margins recovered from that weaker first half result. That stronger second half demand for feedstocks was really off the back of greater clarity on U.S. biofuel policy and stronger renewable fuel margins globally. And we alluded to that at the half year results. So that came through as we anticipated. Moving to Animal Nutrition. As you can see on the chart on the right-hand side, we've continued that track record of growth in the business from both a volume perspective and also a contribution margin perspective. So volumes up 5% year-on-year, marking the fifth consecutive year of growth in that business. In terms of some of the backdrop there, Australian beef pricing has supported demand for liquid feed supplements while relatively high New Zealand milk prices also seeing that sustained dairy sector demand also. In Animal Nutrition, we also completed some capital projects this year to make some modest investments increasing capacities, both across Australia and New Zealand, continuing to enhance our capabilities for our customers. I'll just now move on to Slide 17 and corporate. As I touched on before, we held underlying corporate costs flat at $25 million in the year, reflecting our continued focus on cost discipline. Project costs of $4 million are largely related to the ongoing oilseed crush feasibility work, and we'll provide a further update there later. To briefly touch on the business transformation program, as we communicated to the market back in September, we've delivered $12 million of run rate benefits to date across the overall program. And in terms of costs, this year's operating expenditure was $37 million, and that compares to $30 million in the prior year and capital expenditure was $11 million, in line with prior year. In terms of Release 1 and the deployment timeline for that, covering Nutrition and Energy, as we gave the update back in September, that's been extended into FY '27, and we do remain on track to deliver that against that update we did provide in the first half of September. Also just reiterating on Release 2, we have deferred that while we focus on both operating model implementation in our ECA business, but also looking ahead to that embedding of Release 1. I'll now move over the page to Slide 19 and touch on our balance sheet and capital management. So firstly, on Page 19, we finished the FY '26 year with core cash of $171 million. So that's slightly higher than the balance at half year, maintaining that overall strong balance sheet position. So net debt was $426 million at 30 September. That compares with $102 million at the end of FY '25. So that higher net debt is partially due to higher commodity inventory funding at balance date and also a slightly higher working capital. On the right-hand side of this slide, you can see a chart on net working capital. As expected, the year-end working capital position, we have seen that seasonal unwind from the half year peak. In terms of the closing position at year-end, it is slightly higher than the same time last year. That's partially due to those higher commodity values and also carrying some additional inventory, but it was broadly in line with what we expected with that unwind from the half year position. I'll just now move to Slide 20 and briefly touch on CapEx. Overall, capital expenditure was broadly in line with FY '25. Sustaining CapEx was slightly lower than the prior year. And then that growth CapEx of $8 million, that included $4 million in those animal nutrition investments I touched on earlier and also $3 million of target investment in our East Coast business, including into bulk materials. In terms of depreciation and amortization, that was $117 million this year, slightly below the $120 million in the prior year. And that's just with some short-life assets rolling off and following those higher CapEx spend years back in '22 and '23 into areas like tarpaulins in particular. Lastly, just on Page 21 and shareholder returns through the cycle. The Board today declared a fully franked final ordinary dividend of $0.14 per share. That brings total dividends for FY '26 to $0.28 per share fully franked. And that continues our strong track record of returns to shareholders. Just as a reminder, our $75 million on-market share buyback remains on foot, and we've completed $38 million of that to date. We'll continue to assess capital management against growth opportunities in line with our consistent capital management framework. With that, I'll hand back to Robert for an update on strategy.

Thanks, Ian. For those following online, Page 23 is GrainCorp's vision and strategy, and most of you will be familiar with that. I'll move through the slide very quickly, but we have successfully delivered against all 3 of the Enhance, Expand and Evolve pillars. And importantly, we have significant momentum and opportunities in the months and years ahead, and I'll touch on some of that detail shortly. Before I do that, though, on Page 24, the strategic priorities we have are really well supported by long-term attractive fundamentals. Again, most of you will have seen this chart before, but we continually update it to see where the trends are. We see strong population growth across our key markets, and that certainly drives demand. On the right-hand side at the top, we also continue to diversify the markets that we sell grain to, and those markets are all growing strongly. From a supply point of view, we've seen very strong and ongoing production of about 2.7% to 2.9% compound annual growth over the 10-year rolling average. So consistent growth as growers respond to the environment and employ new technologies and improved yields. Not only are we seeing a growing population, we're also seeing growing demand for nutrition and protein in particular, and that is driving not just overall consumption, but consumption for our animal nutrition products as well. On Page 25, we talk about 3 areas in the business, the East Coast Australia, Animal Nutrition and Agri-Energy areas. Over the next 4 or so slides, I'll draw out some of the examples of what's driving the growth and the headline confidence we have in each of those areas. So I won't spend too much time on this slide, but I'll let you read it at your own leisure around the headline improvements that we've seen. Moving to the specifics on Page 26, talking about Animal Nutrition. I touched on earlier that really strong growth year-on-year to 751,000 tonnes. If you look at that over the look-back period through to '21, it's an even more compelling and ongoing growth story, and that's happened through very deliberate execution of strategy. If you look on the left-hand side, it confirms just the fifth successive year of growth. It highlights the expanded portfolio through the acquisition of XFA, but importantly, CAGR of 14% over that period. And in the financial year '26, I can call out 2 specific initiatives completed, the Titan expansion as part of our Performance Feeds or XFA business and also the introduction of expanded blending capacity at Timaru in New Zealand. Importantly, more of those sorts of expansions continue to be underway, driving forward momentum for ongoing growth. We've got expansion of manufacturing capacity in both Queensland and New Zealand underway. And we've got progress on commercialization of methane-reducing additives to our feeds business. So really exciting developments for the outlook period. As I said, I think the chart on the right-hand side speaks for itself in terms of the numbers, and it also highlights the diverse range of brands we have there across the various nutrition -- animal nutrition segments. Moving to Page 27. We are positioning and extraordinarily well positioned for growth in renewable fuels and our role as a feedstock supplier. Earlier in the year, we released our From Paddock to Plane: Feedstock White Paper. That's an extraordinarily important piece of work that sets the foundation to inform policy position and the consultation work currently underway by the federal government. Just on the left-hand side, I call out a few key areas. First of all, it is a significant opportunity, not just in Australia, but globally, of which GrainCorp is already exposed to through our exports of feedstocks, tallow and indeed canola complex generally. Not only is it compelling from a low carbon point of view, but the disruption we've seen in the Middle East over the last 12 months really highlights the sovereign opportunity for Australia in terms of food security, and that's caught the attention of industry and government alike. We are extraordinarily well placed to deliver against that. GrainCorp continues to work with our MOU partners, Ampol and IFM as we look to work with the federal government to put in place the policies requirement for future investment and expansion in that area. Over on Page 28, I want to talk about how we use technology and make it real in what we do every day. The schematic here on the left-hand side shows our value chain and incorporates what we call the intrinsic value of grain in terms of its quality, location and timing of receivables. Just to call out a few numbers that aren't on the page, but sit behind those flow chart items. We receive over 400,000 truckloads of grain into our network on an annual basis. That's across more than 170 sites and millions of tonnes of grain. Why that's important is it is a very ripe area for the use of large data techniques and AI, and we've seen improvement in cost outcomes and planning and efficiency and customer outcomes as a result of use cases that we have running in that area. We've also historically talked about the significant benefits that technology brought to improving our crush volume throughput. And on the right-hand side, I'm super impressed by recent technology we're using where we're using remote controlled drones that provide benefits in animal and pest deterrence, asset condition monitoring, stock and inventory management and security. So very real uses of technology delivering bottom line benefits into the future for GrainCorp. We spoke, as Ian said, about our business transformation, particularly back in September when we reaffirmed guidance for the year and provided an update on this program. Of course, we're disappointed to defer the Release 1 go-live through until Q2 of calendar '27. But we are pleased to have been able to bring forward some of the early benefits of that with the $12 million in run rate benefits we announced back in September and have talked about today. We remain highly confident and committed to the $20 million to $30 million in benefits we expect by the end of '28 and pleased to report ongoing progress since our update on the readiness for deployment next year of that ERP release. Look, one of the highlights, of course, of the annual results is the opportunity to talk about the year ahead, noting, of course, that we typically provide guidance at our AGM when we've seen the actual results of the harvest. What I can say, though, is that solid production and an improving margin outlook certainly sets the foundation for financial year '27. The ABS crop update in September forecast a winter crop of 26.6 million tonnes and highlights the excellent growing conditions throughout the growing season in Victoria and Southern New South Wales with more variable and drier conditions in northern regions. I'll talk shortly about recent rainfall, but with harvest now underway after a very wet spring, we've seen a very strong acceleration of that with 1.3 million tonnes received in the last week alone and total receivables for the harvest period of 2.1 million tonnes. As I said, we expect those numbers to climb rapidly. Just yesterday, we received close to 200,000 tonnes into the network. So you can see how busy and how quickly things improve at this time of the year. We're also providing an update today that year-to-date, we've exported 500,000 tonnes. And so not only are we receiving strongly, we see good strong export demand as well. I mentioned recent wet spring, and that's touched on the October rainfall deciles on the right-hand side. That, of course, sets the potential for the summer crop outlook in northern regions. But importantly, it builds soil moisture profile more generally as we look to beyond the harvest into the planting season next year. Obviously, the summer months to go, but we're very encouraged by the recent wet weather and indeed, the late yield benefits that will bring in Southern regions in Victoria as Harvest now really starts to get into full swing. As I said, we will expect to provide guidance at our AGM in February. Nearly at the end, just Page 32. I do think it's really important to remind you that GrainCorp is a through-the-cycle business, and we're incredibly proud of the results we've achieved against our $320 million through-the-cycle forecast, which we have absolute confidence and strong conviction to. On the basis, you can see that we've delivered on a pro forma basis, a trailing EBITDA of $400 million, $405 million. What that demonstrates really in the chart is we're extraordinary leveraged to the upside, and we've repeatedly shown our ability to access those opportunities when they exist. And we've shown our resilience when global conditions and/or drought conditions in Australia impact our ability to access the margin. So extraordinarily strong outlook, but also a very strong credibility in terms of what we've delivered. So just rounding it out and opening up for questions on Page 33, reminding you all that GrainCorp is a business that has continued to build credibility and respond to variable conditions. We have incredibly attractive long-term fundamentals. We've got a highly valuable strategic infrastructure asset base. We've got demonstrated supply chain resilience, a strong balance sheet with core cash on the balance sheet. We've demonstrated disciplined capital management and indeed, as a result, a track record of shareholder returns. So with that, I'll hand back to the moderator, and we look forward to answering any questions you may have.

[Operator Instructions] The first question today comes from Apoorv Sehgal from Jarden.

I guess my one question then, just on the Agribusiness segment, guys. So FY '26 EBITDA was $156 million. As we look into FY '27, the crop side is obviously pretty solid, but the crop is still lower year-on-year. And then global grain prices or grain basis has basically erased the gains that were made a few months ago. You've had a bit of a correction recently. So I guess as you see things now, do you think it's realistic for the Agribusiness segment to grow earnings in FY '27, taking into account some of those factors? And if it should grow, what would be the key drivers of that?

Look, I'll make a couple of comments and hand to Ian, Apoorv. You're right, objectively, volume is likely to be down year-on-year, but we've certainly seen a lift in margins and much stronger sentiment globally in terms of the outlook. And I spoke about the volatility, but indeed, the fact that there are some supply concerns, and we're seeing strong ongoing demand and very good supply and yields in Southern regions. Also conscious that it is qualitative comments at this point because we'll talk about guidance in February. But Ian, you can probably elaborate on that.

Yes, happy to. So yes, as you said, Apoorv, although the crop conditions have certainly improved from what was maybe anticipated a number of months ago and especially so in the southern regions, which look particularly strong, volumes are still at a headline level likely to be a bit lower than last year. However, the margin outlook is definitely better. And that more constructive global backdrop should see the margin improvement outweigh pressure on volumes and see a bit of a recovery in agribusiness from what we saw this year. Yes, basis has moved around a bit, but year-on-year compared to harvest last year, prices are higher and there is more attractiveness into the export market in general and in particular, out of southern regions, just with the good crop conditions, we do expect to see that overall good exportable surplus that can create a level of opportunity that maybe we didn't see as much last year. However, as Robert said, it's always tricky at this time of the year to fully predict it. Harvest has really just got kind of fully underway in the last week, probably a bit behind off the back of that rainfall. So it is very early days yet, but that's probably the overall commentary in terms of the backdrop.

Yes. I think it's a really good point, Ian, that price discovery will improve significantly over the next number of weeks as that harvest progresses and growers come to market, which we're seeing positive early activity on. Thanks for the question, Apoorv. If we get through quickly, I'm sure you might ask another one. And of course, we'll get to catch up with many of you through the course of today as well.

The next question comes from James Ferrier from Canaccord Genuity.

I might just pick up on maybe that last comment to AP's question there, Rob, you said positive early activity in relation to grower engagement. Just looking at Page 39 in the deck today, you can see commodity inventory there at balance date materially higher than PCP. Is that primarily volume driven or price? And what does that signal in terms of the outlook for contracted ECA grain sales in FY '27 and the current level of origination activity that's taking place?

Thanks, James. Remember, this is a balance date at 30 September, but Ian will talk to that.

Yes, I can talk to that, James. So yes, good pick up. On the commodity inventory, the higher balance year-on-year, it is a combination of volume and pricing. So pricing at balance date relative to prior balance date is probably in the order of 15% higher on a weighted average basis. So something in that order. So you do have a bit of an impact from pricing, but also we are carrying a little bit more in terms of commodity inventory. You can see from our storage and handling volumes, carry in the network did finish a little bit higher year-on-year. And we do think there's a bit more grain relative to the same time last year to start the season, which can be a little bit helpful. Of course, the overall receivable volumes will be the biggest feature, but there is a little bit of extra carry coming into the season as well, just off of the back of the dynamics we saw last year with that lower pricing and lower margin environment.

The next question comes from Ben Wedd from Macquarie.

Maybe just first, Robert, thanks for your time over the years, and congratulations on your tenure. Look, maybe just sort of a follow-up question or a new question sort of around the Nutrition and Energy business. I take it sort of you're seeing a pretty positive outlook into FY '27 there with sort of crush margins. And also maybe kind of related, just sort of the -- I recall at the first half result, there was a mark-to-market difference, which was expected to reverse in the second half in that business. Can you just clarify if that came through as well?

Thanks, Ben, for your comments, noting, of course, I'm around for a bit, but I'll hand to Ian for that question.

Yes, I can take that. So on Nutrition and Energy, firstly, that unwinding of the mark-to-market, yes, that did come through as expected. It really is just timing on the derivatives at the half year. So that did unwind. And overall, across the year in terms of crush, we saw pretty similar crush volumes, obviously, we report those clearly, they're ever so slightly down. And then crush margins are also almost exactly the same as last year. They're ever so slightly down. So crush actually on balance came through pretty much line ball. That is well below what we'd expect on a through-the-cycle basis and has been impacted by a lot of the same features that actually have been an overhang on export margins, too. It's that global supply combined with tighter supply of canola last year. In terms of looking ahead to next year, as we kind of noted in the outlook, slide in the pack. We do see more positive signal of crush margins to lift into FY '27. It is still pretty early, in particular in Southern regions, just with crop receivables only just really getting up to speed in the last week. So it is early days, but the global backdrop, along with the local factors of a pretty good crop in Southern regions does leave us optimistic for some improvement in crush margins, probably not quite to through the cycle levels, but definitely that positive momentum I touched on earlier on grain export margins, we'd expect similar kind of thematic in crush margins as well.

The next question comes from Owen Birrell from RBC Capital Markets.

I wanted to just follow up on a dynamic that you referred to last year about on-farm storage and how that had impacted the willing -- or had influenced the willingness of farmers to bring product to market and effectively sit on their own volumes. Can you give us an update on how you see that presently? I mean, has that on-farm storage unwound through the course of this year? And how is that sort of sitting as we enter this current harvest? Is it still elevated and therefore, we should assume more volumes to come to market or stay on farm? Just want to get a sense of that dynamic as you see it.

Yes. Really great question, Owen, and there needs to be a lot of extrapolation and estimation to provide an exact answer. All of you will recall that we've talked about the fact that there is a level of uncertainty around what the actual crop production was last year. And there was a disconnect between the pricing and market behavior versus the volume that ABS said that was there. Also recently, adding some weight to that argument, we noticed one of the major agri banks came out with a revised forecast that suggested the crop last year was perhaps lower than reported by in the order of a couple of million tonnes. I'm not sure we're ever really going to know the full answer to that. So I'll go to your question and what we're seeing. We would expect any grain remaining on farm to the extent that it's not possible to work out how much of that is likely to find its way into the domestic industry and feedlots in particular. And if it is still on farm, we'll see more grain come into our network and export channels. So the sorts of things that we look at in addition to the crop production estimate are the outload figures and the export figures. And that suggests to us that we've been doing a very good job accessing the available grain and getting it through the export channel. So look, I think that answers your question that in terms of where we see it at the moment, we really are now moving into the new season. We're seeing strong volumes coming in, and that suggests largely that any hangover of grain last year has either found its way to market or found its way to end customers in the domestic market. Ian, did you have anything to add to that?

That probably largely covers it. But to your point, Owen, if you just look at the headline numbers and what went through not only our system but others, it would suggest there's quite a bit of on-farm grain still. It doesn't feel like that's quite the case. So as Robert was alluding to, our sense is that last year's crop headlines were probably slightly overstated just with what we've seen in terms of market dynamics. If it is there, then that will be a good starting position coming into this year and will mean you more quickly get to an exportable surplus. So that's probably how we see it. And like Robert says, you never quite know the full answer, but that's probably a quick -- a few quick comments on it.