I would now like to hand the conference over to Mr. Robert Spurway, Managing Director and CEO. Please go ahead.
Good morning, everyone, and welcome to the GrainCorp First Half 2025 call. As we start, we're presenting from Sydney today, so I wish to acknowledge the Gadigal people of the Eora Nation. We pay our respects to their leaders, past and present. Through this morning's call, I'll be joined by Ian Morrison, our Chief Financial Officer. I'll provide some comments upfront around the highlights for the half, a reflection on the business, and an update on our strategy and growth initiatives. Ian will detail the financial performance across our segments and talk about the strength of our balance sheet and capital management initiatives before we conclude and open up for questions. I'll also update you on the Slides as we go for those that are following online.
Starting with page 5, just in terms of our investment proposition, this is a bit of an index of the sorts of topics we'll cover today. As I reflect on the fact that it's now 5 years since the demerger of the malt business, and therefore my start, and shortly after that Ian's appointment to the CFO of GrainCorp, we thought it was valuable to just reflect on how the business has changed in that time and indeed the strength of the business we have today. We have extraordinarily attractive long-term fundamentals. That's growth across Southeast Asia, the fundamental demand for food, feed, and fuel, and the fact that we're seeing growing supply here in Australia. We've also got an extraordinarily valuable set of strategic infrastructure assets.
We often talk about that, but over the last 5 years, I have talked about the times when you visit our sites and you see the scale of our upcountry network and the flexibility and the value that brings to growers and customers alike. The quality of our port and processing assets is beyond comparison. When you look at the scale and the enduring nature of those, it sets GrainCorp up to deliver the sorts of results we have demonstrated in recent years when the conditions allow. Those assets have also been a part of the extraordinary supply chain resilience that we have demonstrated.
We have a track record in that, whether that be through the resilience we showed through the pandemic, the resilience we showed when China implemented tariffs on barley, and the ability and agility we had to open up other markets very quickly, or indeed the opportunities that we've taken more recently, such as chickpeas into India in a tariff-free window. Really agile business with a resilient value chain. We've built a very strong balance sheet that's allowed us to continue to invest in the business, both in terms of the core business, but also platforms for growth now and into the future. That's been part of a disciplined capital management program, including acquisitions like the XFA Feeds business, and we'll talk about that through the presentation.
Through all of that, we are demonstrating a track record of shareholder returns and, importantly, the capacity to continue to invest in what is now a much stronger business with continued growth opportunities. If we move to today's highlights for the half year completed for first half 2025 on page six of the presentation, we are reporting underlying EBITDA of AUD 202 million, an underlying net profit after tax of AUD 69 million. Importantly today, we are upgrading our earnings guidance for financial year 2026 to between AUD 285 million and AUD 325 million. In the middle of the page, we continue to demonstrate really strong operating metrics. In a word, we are controlling what we can control well and delivering results, whether that be through the grain handled, again, a record crush volume through our crush plants, and strong growth in volume through our animal nutrition business and segment.
That leaves us in a very strong position in terms of our balance sheet, and Ian will detail that shortly. AUD 296 million in core cash at the balance sheet. The board has declared total dividends of AUD 0.24 per share. That is a fully franked ordinary dividend of AUD 0.14 per share and a fully franked special dividend of AUD 0.10 per share. Today, we are also announcing an increase in our ongoing share buyback from previously AUD 50 million to up to AUD 75 million. If I move now to page seven, health and safety remains an area of continuous improvement and an area that we always strive for an ambition of zero harm for everyone associated with GrainCorp. We are pleased to see the general trend in terms of improvement in our statistics there and acknowledge that there is always more to do.
That is why we continue to invest in leadership capability and upskilling of our leaders, but also a focus on the critical risks that a large operating business like ours faces. We will continue to invest in that area and expect to achieve continued results in that space. On sustainability on page eight, GrainCorp is building a track record of creating long-term shareholder value in this space. I have said many times before that whilst there are challenges in sustainability, there are on balance many more opportunities in the ag sector and for GrainCorp specifically. In particular, I want to call out GrainCorp Next as an example of that. It is an initiative that we have spoken about before that builds out an end-to-end value chain, demonstrating the opportunity for both a low carbon and low emission value chain on canola oil, but ultimately including nature-positive aspects as well.
We've had great engagement from the growers that we're working with, our industry partners, and end customers that ultimately drive the value and opportunity in this space. It is an opportunity to provide a point of difference in international markets, but importantly, to demonstrate the best practice employed right across the Australian agriculture sector and to identify further opportunities for improvement into the future. In terms of our own emissions and profile, we continue to invest in initiatives like the recycling of tar pollens. In the 24, 25 season since harvest, over 300 tons of tarps have been recycled. Since inception, that brings it to over a million kilos or 1,000 tons of recycled tarp material.
A great initiative where we can make a difference in our own business on top of other initiatives like electric loaders and solar panels that we continue to implement across our sites where it makes sense, both commercially and from a sustainability point of view. We are also delighted to continue to contribute to the Jet Zero Council of Australia. That is an opportunity to represent the sector and particularly the feedstock sector, to work alongside our partners in the MOU with AMPOL and IFM on developing ultimately the policy and conditions to see that industry flourish and be invested in Australia so that we can be a part of a domestic feedstock supply to renewable fuels and renewable aviation fuel in particular. If we turn now across to page 10, GrainCorp's vision and strategy on a page.
For those of you that have followed us for a while, you'll be familiar with this and in particular the terminology around enhance, expand, and evolve. Today, we'll talk to some of those examples of how we continue to invest and enhance our core business, the areas that we're growing in across food, feed, and agri-energy, and the tools and analytics and digital technologies that we're using to enable that growth. I do just want to spend a few moments though on page 11, talking about the macro trends supporting GrainCorp strategy. Again, I think it's easy to talk about these from a sector point of view, but very important to highlight what that means for GrainCorp and how GrainCorp's positioned in those macro trends. In the top left of the page, we talk about the population growth and changing demographics.
Just pulling out the detail on that, of the 20 largest grain export markets for Australia and therefore GrainCorp, the population is expected to grow by 80 million people between now and 2035. That really underpins a really strong demand story in food and feed and fuel. Not only do we talk about that, but we've got real proof points that demonstrate the demand we're seeing now and into the future in our business. We're also seeing the Australian ag sector and farmers invest in innovation that are driving a CAGR or compound annual growth over more than 30 years now of 2.7% per annum. On the east coast of Australia, we're seeing, despite volatility associated with weather conditions, strong underlying supply. Those dynamics of supply and demand in our business are very strong.
On the right-hand side of the page, particularly in a volatile global market where we see tariffs becoming commonplace in the headlines, diversification is a key strategy. It's something GrainCorp has been doing and continues to deliver on. I think you can see in the graphic there that not only do we talk about diversification, but we can demonstrate it in terms of the number of markets we operate and the exposure we have to that broad range of markets. Finally, I've talked earlier about our supply chain resilience. That's brought about by the quality of our assets, the scale of our operations across the east coast, and that puts us in really good stead to overcome challenges often outside of our control associated with weather. It really provides value to growers, customers, and shareholders alike.
If we turn on page 12 to the global operating environment, GrainCorp and the broader ag sector has a long history in managing both tariffs and non-tariff barriers well before they became a daily headline. What that means is we have contracts that are very clear on where those responsibilities and obligations lie, and we have risk management frameworks in place that not only manage the risk, but set us up to take opportunities in a volatile environment. We've demonstrated that even recently with the tariffs from China on barley two or three years ago now and the ability to open up new markets almost overnight as a result of that disruption. We've also demonstrated earlier in this half the opportunity for export of chickpeas to India as they reduce the tariffs. GrainCorp not only has decades of experience, but a demonstrated track record in that space.
Beyond that, the fundamentals of food are far more important than the prevailing market conditions. People always need to eat, and it's our experience that trade will continue to flow, and that sets us up in a very resilient position in a market to be in. I've touched on the diversification and the importance of that as a strategy, and that's something that we have delivered on and continue to focus on in our business. Underpinning all of that is GrainCorp's strong balance sheet. Not only does that provide for capital returns to shareholders and investment in the business, it allows us to take opportunities when they prevail in a volatile market. GrainCorp is extraordinarily well positioned, and that leads into our strategy if you look at page 13 more broadly.
On this page, it really introduces some areas I'm going to spend a few minutes on just as examples of where we are enhancing, expanding, and evolving our business. I will jump straight to that, and the first example on page 14 is one of investment in our existing network and our grain handling network. It's an expansion and improvement in both the efficiency and capability of our Condobolin site in New South Wales. For an investment of about AUD 7 million completed earlier in this half, we've been able to expand the rail loading capacity from 30 to 48 wagons. That's important because it improves the amount of grain that we can move to port. It reduces the cycle time by about 20%, so that provides value to both customers and to growers.
It also is good for the environment because moving product off-road transport to rail transport is both more economical, but also better for the environment. It is a good example of the sort of initiatives right across our business that demonstrate our disciplined investment approach and capital allocation approach. It provides a lift in service and values to growers and creates a more efficient supply chain. On page 15, we have and continue to expand our animal nutrition portfolio. The XFA acquisition was completed on the 2nd of April of last year, and the integration has progressed extraordinarily well. In the first 12 months of ownership, that business has delivered AUD 14 million in EBITDA, outperforming expectations of only AUD 10 million. It demonstrates the value that our ownership can bring to businesses like that and the investment and ongoing organic opportunities that we see in that sector of our business.
We continue to look for similar type acquisitions, not just in the feed space, but across our portfolios that provide programmatic opportunities and growth in our business, and we have a healthy pipeline in that respect. On page 16, we provide an update on the renewable fuel sector and our growth ambitions in that space. As I've already touched on, we have an existing MOU with our partners in AMPOL and IFM, and we continue to work together with them on the deliverables of that MOU, particularly around developing an opportunity for supply to AMPOL in the event that they convert the refinery in Brisbane to process renewable fuels. That also requires bringing many parts of the industry together, including having the right government and policy frameworks in place. As we've always said, GrainCorp's investment in a future crush plant will be reliant on the demand being in place.
That's where partnering with companies like AMPOL and IFM stand us in good stead, and we expect that that will create opportunities through 26 as they complete the economic studies and engineering studies alongside us for that value chain. We are encouraged by the re-elected government's allocation of AUD 250 million for renewable fuels as a pre-election commitment, but also the consistency that the government brings and the interest in that space. We've also recently seen an announcement just this week by AMPOL and Qantas and Sydney Airport around an import of renewable fuel demonstrating the demand is there, and it makes absolute sense over the medium term to see that demand manufactured in Australia, which will provide better economic outcomes, better carbon intensity outcomes, and the opportunity for investment and job creation in Australia.
Another example of strategy and action in our business is our business transformation program discussed on page 17. Just to recap, the program overview is a business-wide transformation program to unlock value and drive efficiencies. It also is an opportunity to address end-of-life version of an SAP instance, which modernizes our systems for the future. Importantly, we've flagged benefits of AUD 20 million-AUD 30 million on completion of the program. I'll talk in a moment around how we're endeavoring to bring some of that forward and the growing confidence we have in that commitment. In terms of how the program's progressing, as we all know, there are challenges with these programs, and we have moved to de-risk that by splitting it into two releases. That is progressing, and we still expect to deliver release one in the first half of financial year 26.
We are flagging that through 26, the previously flagged expenditure is likely to be up by about AUD 10 million as we've looked to adjust scope and de-risk the programs. The overall cost of the total program, including release one and release two, is expected to be about the same as previously advised, as we learn from release one and, as I said, adjust the scope between the two releases. In terms of where we're at on release two, we expect to provide an investment case and approval for that later this year. Just referencing back to the comments I made on targeted benefits for these programs, we have listed on the right-hand side the sort of benefits we expect, particularly around improved asset and labor productivity and the cost impact of those initiatives. The vast majority of the targeted benefit in EBITDA is associated with cost.
We also expect through that margin uplift in areas of our business through better data-driven decision-making and the platforms that provide for better future growth and improved customer service levels. We are increasingly confident that we can bring forward some early-stage benefits ahead of completion of the full program, and we'll be in a position to provide more updates towards the end of this year on that program. Just before I hand to Ian on page 18, really a recap and a summary of what I've talked about. A strong first-half performance with underlying EBITDA of AUD 202 million, strong operating metrics, and an upgrade to our earnings guidance to underlying EBITDA of between AUD 285 million and AUD 325 million. We are continuing to progress our strategy, and we're demonstrating the capability of this business in delivering those sorts of results. We are delivering shareholder value. We've got a strong balance sheet.
We've declared interim dividends of AUD 0.24 per share and increased our ongoing buyback from AUD 50 million to up to AUD 75 million. Ian, I'll hand across to you to talk through the segment report and some of the detailed financial results. Thanks, Robert, and good morning, all. I'll now move on to slide 20 to summarize financial performance for the first half. At a headline level, agribusiness results are higher year on year, and that's benefiting from improved East Coast Australia crop production. Nutrition and energy delivered a strong first-half result, benefiting from an uplift in animal nutrition earnings, and that's following the inclusion of XFA with the completion of that acquisition 12 months ago. Nutrition and energy division also benefited from some mark-to-market timing in the first half relating to crush, and that partially offset lower structural crush margins.
I'll now move on to agribusiness segment and, in particular, ECA on slide 21. We saw increased total grain production of 33.8 million metric tons in 2024-2025, and that's compared to 26 million metric tons in the prior year. The backdrop to that is strong production in Queensland and New South Wales in particular, partly offset by lower production in Victoria. As noted on the slide here, AMPOL has reported the lowest production in Victoria since 2018-2019. To see that overall strength of crop right across the East Coast really shows that diversification and the strength of the crop up in the north. Another item just to call out is the carry-in of 2.5 million metric tons compared to 3.9 million metric tons in the prior year.
Overall, that gives a total grain handled of 29.5 million metric tons compared to 25.4 in the prior first half. Another callout for the first-half result in ECA was capturing better export margin opportunities on commodities such as chickpeas and canola seed. That really highlights the ability of our network to respond to the market conditions and the demand signals for different commodities. Also, just to highlight, the result includes a P&L impact of AUD 42 million from the crop production contract, and that's with this year's cash payment of AUD 58 million. Just to note, this year's cash payment sees us reach the cumulative cap under that contract. What that means is we will not have any further net payments against the contract for the remaining four years of that contract while still having the protection on the downside.
Finally, on ECA, we continue to focus on diversification of our revenue streams through the utilization, in particular, of our ports for bulk material handling. It was pleasing to see the first half report a further increase in contribution margin from that part of our business, which continues our positive momentum on building out this earning space. I will now move on to slide 22 and touch on our international business. Similar to East Coast of Australia, we saw higher volumes with the benefit of a larger Western Australian crop. As noted on the slide here, the winter crop in Western Australia was well above the prior year and also well above the five-year average, and that led to those increased contracted grain sales highlighted on the right-hand side of this slide.
However, despite those higher volumes, we have seen stronger global production from many of the major exporting markets lead to weaker export margins relative to the prior year. This same dynamic also is having an impact on our Canadian business and our joint venture, Grains Connect Canada. We continue to see challenging results there with a loss of AUD 10 million reported in this half compared to AUD 7 million in the prior year first half. Overall, though, we do remain pleased with the operational performance of the assets and their efficiency. However, noting the continued challenging financial results, we are undertaking a review of that business in conjunction with our JV partner. Moving on to slide 23 now and our nutrition and energy segment. We continue to see strong crush volumes with 283,000 tons crushed in this half, marginally higher than the prior year.
We also saw a positive increase in edible oil sales volumes as a result of improved domestic demand this half. We have completed the transition of processing volumes from East Tamaki plant in New Zealand to West Footscray in Australia following the closure of manufacturing at that site that we announced last year. In terms of margins, as we had indicated at year-end and back in February when we provided guidance, crush margins are structurally weaker than the prior year. The main impact driving that is the smaller Victorian canola crop, as well as lower global demand for vegetable oils.
In terms of that global dynamic impacting crush margins, we're seeing a strong global supply of oilseeds out of competing markets, as well as some weaker demand into the renewable fuel segment, and that's having that broader impact on crush margins that not only we're seeing, but also many of our peers are seeing. As I did touch on at the opening of this section, some of the lower crush margins were mitigated in the first half by some timing benefits on mark-to-market, and that supported the strong result in the first half. Now, just moving over the page to slide 24 and our animal nutrition and agri-energy businesses. Animal nutrition sales volumes have increased half on half, partially as a result of the inclusion of XFA Feeds, but also off the back of increased sales volumes in New Zealand.
That is as a result of dry conditions we have seen in the North Island and record farm gate milk prices driving demand from the dairy sector. We are delighted to be able to report the strong progress we have made on the integration of XFA with the business generating EBITDA of AUD 14 million for the 12 months to 31 March 2025, and that is well ahead of the business case that Robert touched on before. Just mentioning briefly on agri-energy, volumes were slightly lower than the half, but still remain robust off the back of the high domestic slaughter rate. In terms of margins, we have seen demand into renewable fuel amidst U.S. biofuel policy uncertainty have a little bit of impact on that.
Now, just moving on to our corporate segment on slide 25, underlying corporate costs remain in line with the prior year, and we remain focused on managing costs right across the business. Other aspects just to touch on, spending on growth projects noted here on the slide mainly continues to represent the ongoing work on the oilseed crush feasibility study. As noted, business transformation costs were higher half on half as we commenced the implementation of release one of the program this year. Now, just moving on to slide 27 and touching on the balance sheet, we finished the half with a core cash position of AUD 296 million, slightly down on the balance at prior year-end, but overall in a very strong position.
The higher net debt position noted on the right-hand side in the table of AUD 1.3 billion, that's driven by funding requirements for commodity inventory as a result of the larger crops we've seen across both the East Coast of Australia and Western Australia. That just reflects the typical cycle of commodity inventory with the peak often being at the half-year date. Overall, in summary, our balance sheet is in a very strong position, which allows us to continue investing for growth, but also continue to provide those strong returns to shareholders. I'll now move on to slide 28 and touch on capital expenditure. Total CapEx of AUD 30 million and a half includes sustaining CapEx of AUD 22 million.
For the full year, we'd expect sustaining CapEx to be in the range of AUD 60 million-AUD 65 million, and that typically reflects the weighting to the second half in relation to sustaining CapEx. If that range is slightly higher than our typical AUD 40 million-AUD 50 million of sustaining CapEx, that reflects the larger crop in the north to some extent, but also reflects some additional investment across our network, including the upgrade at Condobolin that Robert touched on earlier. On the right-hand side of this slide in relation to depreciation and amortization, we'd expect to see full-year D&A broadly in line with FY 24. Now, just moving to Slide 29 and returns to shareholders.
As Robert noted earlier, the board today declared total dividends of AUD 0.24 per share fully franked, and that's made up of an ordinary dividend of AUD 0.14 per share, which continues that track record of consistency of ordinary dividends, and in addition to that, a special dividend of AUD 0.10 per share, also fully franked. In addition to that, the board has increased the on-market share buyback up to a maximum of AUD 75 million, and AUD 8 million of that has been completed as at the balance date of the first half. This overall continues our strong record of capital management and returns to shareholders. As highlighted on this slide, since the start of FY 21, in total, we've returned over AUD 520 million to shareholders. Capital management will continue to be assessed against growth opportunities in line with our capital management framework.
On that note, I'll now hand back to Robert.
Thanks, Ian. On page 31, we provide some comments on the outlook. As we've talked about today, we're upgrading our financial year 2025 earnings to underlying EBITDA earnings to between AUD 285 million and AUD 325 million. If we look at the market outlook, we still see a strong global supply of grain and oilseeds, and that is impacting and creating a competitive margin environment. In particular, as Ian mentioned, we're calling out the softer margins that we expect to see in the nutrition and energy business through crush margins. That is typical where you do see a mix between first half and second half, but certainly a feature of what we're seeing this year.
Moving to the 25, 26 plant and what that means for the crop that's going in the ground now will be harvested later this year and impacting, of course, next year. We've seen excellent rainfall and soil moisture conditions across Queensland and northern New South Wales, and we'll go as far as saying that sets the potential for a large harvest in that area. It is fair to say that autumn and winter rainfall will be required to release the benefits of dry sowing crops in Victoria. Alongside farmers, we'll be looking at the rain outlook over the next few months in Victoria in particular. We note that ABERS will provide their first update of the 25, 26 crop in the first week of June of this year.
Just on page 32, as we move to questions and in conclusion, you are seeing strong execution and the demonstration of capability in this business in our delivery of a AUD 202 million EBITDA result in the first half. We continue to invest in our business. We have a strong balance sheet with core cash of AUD 296 million at the balance date. The board has declared total interim dividends of AUD 0.24 per share, and we have increased our buyback to up to AUD 75 million. We have also, again, upgraded our underlying EBITDA earnings for 2025 to between AUD 285 million-AUD 325 million. At that, I will hand back to the moderator, and Ian and I are very happy to answer any questions you may have. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.
If you wish to cancel your request, please press star two, and if you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Apruv Sagal from UBS. Please go ahead.
Oh, thanks. Good morning, Robert and Ian. Just the first topic I wanted to touch on on the transformation program slide 17. Just want to understand the costing and the timing of it properly. So AUD 19 million has been spent in the first half across both OpEx and CapEx. Into the second half, I think that'll be AUD 25 million, roughly, just the midpoint of the release one spent. So that's AUD 25 million in the second half and a further AUD 25 million in first half 2026 for release one. Is that correct?
Broadly speaking, Apruv, that's the right way to think about it and exactly what we're guiding to in terms of the spread of the spend to go. It's fair to say the spend is relatively well locked in for the second half, and the increase we're calling out of AUD 10 million over the previous advice will apply in 26, not this year. Yep. Okay. And then release two, it sounds like, I mean, apart from the AUD 2 million you've spent, tiny amount so far, that's largely just going to be FY 26 for release two. And is the quantum of release two broadly similar to release one, which I think if you tally up all the numbers for release one, it's about AUD 80 million cumulative? Yes, that's right. That's broadly what we've said. Obviously, it is subject to business case and finalization.
What we would say is that we've been able to learn from the experience of release one in terms of how we scoped and plan activities, and I think that's been an important de-risking approach to the overall program. In particular, I want to flag the growing confidence we have in the AUD 25 million-AUD 30 million that we've flagged associated with both release one and release two, but also our ability to deliver at least some early-stage benefits of that following the completion of release one. That's a separate stream of work that really, I think, underpins not just the reason why we're doing this, but the reason why we're doing it the way we are. Okay. One more question just on crush margins.
Do you think the second half would likely represent trough crushing margins and we sort of start seeing a recovery maybe in first half 26, or is your expectation that this could be a bit more of a longer-dated recovery process? Might get Ian to come in on that as well, Apoor, but it's always difficult and we're reluctant to forecast specific margins over a specific period of time. What I can talk to and Ian might be able to add to it is the factors that drive that. We have seen two factors impacting crush margins. That has been the dry conditions and the lower crop last year in Victoria, and that certainly pushes pressure on margins in the second half as effectively you've got to pay for seed that you've got to go further for.
The transport cost becomes relevant in that respect and the competitiveness in Victoria, where our major crush plant is. The second factor is the global environment where we have seen strong supply of oilseed and competing products like soybeans globally. That has meant that whilst there is still global demand for these products in terms of the oilseed and the oil, it is competing against fairly full supply from the rest of the world. Now, we do, and as we have flagged before, that will correct over time. It is more difficult to say when that will be, and we look at things like conditions in the northern hemisphere, which will ultimately change the supply-demand dynamic in the rest of the world. Ian, have you got anything to add to that?
That probably largely covers it. I'll prove.
The other aspect that can support global crush margins is that renewable fuel and demand and policy settings that support that. That is probably the other factor. I think the bigger fundamental ones are definitely those supply and demand of crop, which is always a key feature of margins. That Victorian canola crop being a key aspect and then canola and soybean crops elsewhere globally. These are the things that will affect margins. It is hard to predict that too far out the curve just as a result of weather conditions, but those are the elements that, broadly speaking, can have an impact on crush margins. Just a quick clarification question, please, Ian. In FY 2024, you called out AUD 10 million of those East Tamaki closure costs. Was that all done in 2024? Was there any sort of leftover in the first half? Yeah.
Very, very modest in the first half of this year. Just remember that 10 million last year was across the full year, not all in the first half. Some of it was in the first half, but some of it was in the second half last year. In terms of year-on-year in this first half, it is a relatively modest uplift in earnings as a result of that.
Thanks, guys. Thanks, Paul.
Thank you. Your next question comes from Owen Birell from RBC. Please go ahead.
Yeah. Good morning, guys. I just wanted to, I guess, draw on a comment that you made around the human nutrition business, around a timing benefit that occurred in the first half. I just want to give you a chance to reiterate your comments around that first one. Yes.
That's not so much specifically the human nutrition business, but the nutrition and energy division in aggregate. I'll let Ian clarify those comments.
Yeah. It's especially in relation to crush margins. As you can appreciate, there are three legs to crush margins. There are the seeds that you're purchasing, the meal that you're selling, and then ultimately the oil that you're selling. From time to time, we're hedging open parts of that as we haven't always purchased the seed, sold the meal, and sold the oil at the same time. We do enter into effectively hedges. For example, if you've bought the seed, you've sold the meal, but you haven't sold the oil yet, we might enter into a hedge product like a futures product to effectively hedge the flat price exposure, creating a basis exposure.
What can happen from time to time is you have to mark to market effectively the derivative or the futures hedge. The other side of that, being the realized gain or loss against the oil or the meal, happens when you actually sell the product just from an accounting perspective. Typically, the noise around that is very modest, but there is a little bit more to that in the first half in terms of a benefit that could partially unwind in the second half. It is in the handful of millions, though, so not a significant feature, but does have a little bit of a pull forward into the first half. Hopefully, that makes sense, Owen. Yeah. Yeah. I was going to ask you to quantify it. You say sort of a few million dollars impact to effectively EBITDA in the first half.
I guess interrolling into the second half, I mean, the nutrition and energy business delivered a fairly flat EBITDA half on half. Now, you're calling out, I guess, weaker spreads into the second half. You probably won't have this benefit of this hedge delta coming into the second half as well. Are you able to give us a sense of how much, I guess, the earnings delta that you're expecting to see into the second half, or sort of, I guess, some sort of first half, second half split on what you're expecting from that business?
Yeah. If you look at the nutrition and energy segment in general, typically there is a weighting to the first half, similar in agri business as well.
That weighting, I'd expect to be a little more pronounced into the first half this year as a result of a couple of factors. One is that timing benefit I just mentioned, and the second is increased pressure on margins, half on half, with some of the factors we touched on before that are having a broader impact on margins. Of course, conditions looking ahead to new season crop can impact that, especially in quarter four. At this stage, we've only really got visibility of Q3 crush margins, but as the year progresses, we get more visibility into final quarter and ahead into the start of next year. Okay. Do you mind if I ask just a quick question?
Just wanted to understand whether you think for your markets whether there's been any sort of flow-on impact or benefit from the recent flooding that we've seen in southeast Queensland. I know it sort of starts to move westward towards South Australia. Is there any benefit to the growing areas that you're exposed to?
In terms of the benefit, it's soil moisture profile and the potential that creates for a well above average crop in that region that's going in the ground now and impacts and flows into next year. That is very much the net positive side of it. I think when we're talking about flooding and/or dry conditions, it's always important to acknowledge that for the.
Your participation in the conference has been terminated. Your participation in the conference has been terminated. Okay. Please go ahead. I've narrated your line. You might be on mute.
Apologies. Your next question comes from Apurv Segal from UBS. Please go ahead. Oh. I thought maybe we were ending soon.
Thanks for taking the follow-up. I'll just keep it quick. Just on the—great, thank you for your applause. Maybe just a quick one on the Grains Connect Canada JV. I did not comment earlier, you're undertaking the review of that with your JV partner. Just maybe talk about what has not quite gone right over there. Is it purely on the macro side? Is it execution issues? Losses have obviously expanded a bit in the half again versus PCP. Just your expectations going forward.
Yeah. Look, I think it is an easy answer to provide. It is on the macro side. As we have said, we continue to be happy with the operational performance of that business and the quality of the assets.
It's been exposed to the prevailing conditions in Canada where there have been droughts that have impacted supply against a backdrop of recent, over the last few years, investment and capacity in Canada, which has made it tough for everyone in the industry. We certainly see that as we look at the market in general. Add to the top of that the global environment that we've talked about impacting our overall business. That certainly is more apparent when you look at the starting position of Canada. Macro issues in entirety. We will be working with our joint venture partner, as we've said, on a strategic and operational review to work out what the best solution for that business is into the future. Thanks, mate. I'm conscious of time.
We might hand back to you to wrap up the call, and I'm happy to make some closing remarks. Thank you.
That does conclude our time for questions. I'll now hand back to your speakers to make some closing remarks.
Thank you, everyone, for joining us today. I have very little to repeat other than, as I said, strong result in the first half, continuing to invest in our business, a strong balance sheet which allows us to invest in the business and provide capital returns to shareholders, including the AUD 0.24 of interim dividends and the increase in our buyback to AUD 75 million. Of course, an upgrade in our guidance today to between AUD 285 million and AUD 325 million. Thanks for your interest and support. We look forward to catching up with many of you over the course of the next few days. That does conclude our conference for today.
Thank you for participating. You may now disconnect.