Elders eyes horizon after big earnings plunge
Elders has blamed challenging seasonal conditions, cautious client sentiment and lower livestock prices for a $44 million drop in first-half earnings, but remains optimistic about the rest of the year.
Adelaide-headquartered agriculture firm Elders saw its earnings slide by 54 per cent in the first half, down by $44.4 million to $38.4 million in the six months to 31 March.
Underlying profit after tax was also down by 72 per cent to just $14.4 million, down from $50.6 million in HY23. On a statutory basis, profits were down 76 per cent to $11.6 million.
Its first-half earnings are the weakest they’ve been since the same period in 2020, when the company made a $53 million half-year profit.
Nevertheless, Elders remains optimistic about the remainder of the financial year and has reaffirmed its full-year earnings guidance of between $120 million and $140 million. In its last full year period, Elders earnings were $171 million in total.
Elders – which ranked 13th in InDaily’s SA Business Index last year – said the half-year results were “influenced by challenging seasonal conditions, cautious client sentiment, softening crop input prices and lower livestock prices”.
“Trading in the second quarter improved, compared to the first quarter, following an uplift in client sentiment, supported by un-forecast, widespread rainfall across many regions in eastern and southern Australia,” Elders said.
“Livestock prices recovered strongly throughout the half in line with improved seasonal conditions, which have also assisted the outlook for the 2024 winter crop and Elders’ second half.”
Total sales revenue was also down by $315.6 million in the half to $1.3 billion – a 19 per cent decline on HY23 – and the company’s directors have elected to pay an interim dividend of 18 cents per share to shareholders.
Trading conditions are expected to pick back up in the second half of FY24 according to Elders which said client sentiment was improving following a return to average seasonal conditions.
“A return to average seasonal conditions in the second half, with generally favourable soil moisture profiles and improving client sentiment following the end of El Niño, is expected to have a positive impact on the Rural Products business,” Elders said.
Elders managing director Mark Allison said he was “confident in a stronger second half with a return to average seasonal conditions and improved outlook for winter crop and livestock production”.
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“As a leading agribusiness we expect fluctuations in our operating environment; our response remains to focus on the controllable,” Allison said.
“This includes a commitment to a tightly managed cost base and a geographically diverse multi-product portfolio, to deliver strong earnings and value for shareholders through the cycles.”
Shares in Elders are down 0.85 per cent to $8.14 per share at the time of writing.
