Elders profits from farmer demand for crop inputs and buoyant livestock
Elders shares are trading at 10-year highs on the back of a strong half-year result announced today.
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High livestock prices and strong demand for crop inputs have been two of the drivers behind Elder’s strong half-year result today, with the company’s profit up 90 per cent to $52 million.
Underlying earnings before interest and tax was $52.8 million, up from $34 million in the previous corresponding period.
This was reflected in solid performances from rural products, high prices for both cattle and sheep and steady earnings in real estate and financial services.
Australian Independent Rural Retailers, which Elders acquired last year, contributed $8.6 million to EBIT. Elders’ return on capital is sitting at 17.7 per cent.
These strong results have lead to Elders shares trading at 10 year highs, hitting $10.33 today at 2.30 pm AEST.
Chief executive and managing director Mark Allison, said the company has prospered in a volatile market as a result of solid business foundations, strict financial discipline and a commitment to keeping the safety and prosperity of clients and communities across Australia at the forefront of priorities.
“The first half of FY20 has been tumultuous, with devastating bushfires across large parts of Australia, the COVID-19 pandemic, and conversely, drought-breaking rain across many parts of Australia,” he said.
“These events have proved yet again the resilience of our industry, and our ability to rise to the challenge.”
Mr Allison said that COVID-19 had not had a significant financial impact on demand for Elders’ products and services, customers and supply chains for the six months to the end of March and this has continued into April and May.
“Successive rainfall events across major cropping areas on the east coast have had a positive impact on operational performance within the last period, lifting farmer confidence and driving strong demand for crop inputs,” he said.
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Results from agency services were up, driven by strong prices in cattle and sheep, limited domestic supply and continued demand from key export markets. However, wool margins declined with lower bales sold due to lower prices deterring growers from trading.
Real estate delivered a higher result with sales turnover up across most offerings.
Elders is, subject to any future negative impacts arising from global volatility, on track to deliver a full year result of between $96.5 million and $112.9 million EBIT.