GrainCorp expects the drought in Queensland and northern NSW to hit its yearly profit by at least 54 per cent.

GrainCorp expects its yearly profit to tumble as drought conditions in Queensland and northern NSW hit grain volumes.

Australia’s largest grains handler told shareholders at its annual general meeting on Tuesday that it expects its 2014 net profit before significant items to be between $80 million and $100 million.

The result would be a significant drop from its 2013 net profit of $175 million before significant items.

GrainCorp chairman Don Taylor said drought conditions in Queensland and northern NSW had resulted in lower winter grain volumes and were continuing to affect summer crops.

However, conditions continue to be favourable in the southern part of the country.

He said the guidance would still depend upon the duration and impact of drought conditions, whether grain was exported or absorbed by domestic demand and the strength of the Australian dollar.

“We’d like to see the continuing softening of the Australian dollar because that provides more opportunity,” he said.

The company also expects yearly earnings before interest, tax, depreciation and amortisation of $275 million to $315 million, down from $395 million the previous year.

Mr Taylor said GrainCorp’s diversification strategy was softening some of the impacts from the volatility in grain production in eastern Australia.

“While GrainCorp Marketing also has some reliance on eastern Australian volume, market volatility may create domestic and export sale opportunities for our trading teams in Australia, Europe, North America and Asia,” he said.

He said the federal government’s rejection of the proposed takeover by Archer Daniel Midland (ADM) in November was disappointing but the company could not afford to dwell on it.

The government rejection of the takeover bid had also resulted in some of GrainCorp’s customers, who in many cases are also their competitors, becoming more hostile in their negotiations with the grains supplier.

Mr Taylor said this was not going to change and GrainCorp would have to learn to adapt to these new conditions.

The company told shareholders that it was continuing its search for a new chief executive following the departure of Alison Watkins in December only days after the government veto of the ADM bid.

“I am hopeful that this process will be completed by mid-year,” Mr Taylor said.

Ms Watkins is now the chief executive of beverage producer and supplier Coca-Cola Amatil.

GrainCorp shares fell four cents to $7.77.