Elders’ “early milestone” in reversal of fortunes
South Australia’s iconic agribusiness Elders Limited today announced a turnaround in underlying profit, claiming its dark days are behind it.
The company reported it had narrowed its half year loss to $10.2 million.
Shareholders may see some light at the end of the tunnel after years of losses.
Elders said its statutory loss of $10.2 million after tax included a loss of $16.8 million from items unrelated to underlying performance, including operating results from forestry and the fair value adjustment of specific non-core assets now classified as held for sale.
The company focused on underlying profit exclusive of these items being $6.7 million, “a turnaround of $30.4 million on the loss of $23.7 million in the prior corresponding period”.
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Elders’ managing director Mark Allison said that the company’s first half results represent “an early milestone in the journey to becoming a value-generating investment for its shareholders”.
“We’ve moved from incurring underlying losses to generating underlying profit and it is pleasing that every part of the business delivered improved results – in spite of variable seasonal conditions which included drought in much of north eastern Australia,” Allison said.
“While we know that further improvement is required and we are focused on delivering those improvements, these results are encouraging as they show the business is responding to management.”
Allison said that Elders’ traditional agency operations had made the greatest contribution to the lift in gross margin generated, with live export also providing strong growth.
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“The lower costs brought by the business restructuring in FY13 had also played a key part in the improvement.”
In the period, the company’s exit from forestry was largely completed with the termination of the last major lease commitments during the period.
The residual lease liabilities now sit at approximately $1.6 million per annum.
Elders completed further debt reduction with net debt at 31 March of $236.6 million compared to $255.2 million at the start of the period and $314.1 million 12 months earlier.
Allison said Elders capital management plans included further sales of non-core assets and subsequent debt reduction over the course of 2014.
In its outlook, the company had a positive view of seasonal and market conditions.
Recent rainfall has provided a good start to the winter cropping season.
“Currently, cattle prices are recovering, sheep prices are strong and feedlot and live export demand continues to be healthy. The second half outlook is positive, subject to seasonal conditions, and we expect ongoing improvement against last year’s results.”
Elders shares opened at 11.5 cents.
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