Underlying FY net profit A$142 mln vs A$53 mln Company sees...

• Underlying FY net profit A$142 mln vs A$53 mln
• Company sees "substantially" smaller crop in year ahead
• Shares down 5 pct

(Recasts throughout, updates shares, adds analyst)

Australia's biggest grain handler GrainCorp Ltd (GNC) said on Tuesday its annual underlying profit nearly tripled on the back of a record wheat crop, but warned of a shrinking harvest and volatile energy costs ahead, sending its shares sharply lower.

The negative reaction to GrainCorp's best result in four years underscored its exposure to the effects of weather on crop volumes, with the company making efforts to diversify its business into related areas.

GrainCorp benefited from a record east coast crop as it posted a A$142 million ($107 million) net profit before one-off items for the year to Sept. 30, within its earlier forecast of A$130 million to A$160 million.

But Chief Executive Officer Mark Palmquist warned of a "substantially smaller crop" due to "prolonged dry weather across many grain growing regions".

The company expected a "below average exportable surplus" of grains, Palmquist added in a statement.

GrainCorp shares were down 5 percent in afternoon trading, their biggest single-session dip in 16 months, while the broader market was up 0.3 percent.

Lower wheat output means GrainCorp, which enjoys near dominance across the Australian east coast, will earn less income from storage and handling, which makes up about 60 percent of its revenues.

Australian authorities have said the country faces a 50 percent chance of an El Nina weather event in 2018, twice the normal likelihood, potentially affect global grain supplies. La Ninas are linked to floods, droughts and hurricanes.

"The best time to buy (GrainCorp) is during a poor season in anticipation of improved returns for when an average season returns," said Morgans Financial Ltd analyst Belinda Moore.

"The perception may be that this is as good as it gets." GrainCorp's pre-tax profit from grain marketing and from storage and logistics quadrupled amid surging grain volumes.

The company has been diversifying in recent years to offset weather-related earnings volatility, including boosting malt production to serve a booming craft beer market and buying an edible oils business. Pre-tax profit from edible oils rose 9 percent.

Total revenue for the period rose 10 percent to A$4.58 billion, after ideal weather pushed Australia's 2016/17 season wheat crop to a record 35.1 million tonnes.

GrainCorp declared a final dividend of 15 Australian cents per share for the period, up from 3.5 Australian cents the previous year. ($1 = 1.3268 Australian dollars)