SA agribusiness Elders resilient as underlying profit up 71pc

A South Australian business has overcome drought, bushfires and COVID-19 challenges to post its strongest financial result in a decade with investors set to share in the success.

Elders chief executive Mark Allison

South Australian agribusiness Elders has posted a 71 per cent jump in underlying profit after tax to $109m, showcasing its resilience in the face of drought, bushfires and the challenges brought on by COVID-19.

In the 12 months to the end of September, Elders, which employs more than 2000 staff, reported a statutory profit after tax of $122.9m.

Underlying earnings before interest and tax (EBIT) came in at $119.4m, represents an increase of 62 per cent on FY19.

The business also announced a fully franked final dividend of 13 cents per share.

Chief executive and managing Mark Allison, who took home $3.2m (including incentives) in remuneration, said the strong results are “particularly pleasing” given they were achieved despite the ongoing challenges and without any government assistance in the form of JobKeeper or other COVID-19 support measures.

“Our FY20 results highlight the resilience of our business, the benefits of our diversification across both geographies and products, and our acquisition strategy,” Mr Allison said.

“Our solid business foundations and strict financial discipline, together with a commitment to ensuring the safety and prosperity of clients, communities and staff across Australia allowed us to succeed despite challenging operating conditions in FY20.”

The performance of Elders’ rural products division was a highlight following the acquisition and integration of supplies wholesaler AIRR, which added $44.0m in wholesale gross margin, well in excess of acquisition business case projections.

Within its agency Services, higher livestock prices provided upside and more than offset the soft wool market while its real estate services division achieved strong growth in both broadacre and residential property turnover.

Chairman Ian Wilton said Elders has achieved its strongest result in a decade.

“The sector has withstood remarkable obstacles in a year full of volatility, from extreme weather and natural disasters to the COVID-19 pandemic,” Mr Wilton said.

“Yet throughout, agriculture has emerged more resilient and continued to perform strongly. As has Elders.”

This financial year’s outlook was positive with area planted to summer crop expected to rebound from historically low levels last year, resulting in recoveries in demand for crop protection and fertiliser.

While cattle prices are expected to soften from the record high prices seen in FY20, they are likely to remain in the relatively high range.

Significant growth opportunities exist to gain market share by serving new customers, in new geographies with its multiple product and service portfolios, Mr Allison said.