Elders profits remain solid despite challenging rural conditions
The drought has attracted headlines across the country, but agribusiness Elders has still managed to post solid profits.
SA Business
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Agribusiness Elders has delivered a solid profit result, with an underlying after-tax profit of $63.6 million, which is in line with the previous year despite challenging conditions in the rural sector.
Underlying earnings before interest and tax fell one per cent to $73.7 million.
The company has announced a final dividend of 9 cents per share fully franked, taking the full-year dividend to 18 cents.
Elders shares are up 4 per cent, trading at $6.30.
Chief executive Mark Allison said while business conditions for customers in many parts of rural Australia were tough, the result highlighted the strength of Elders’ business and geographic diversification.
“In 2014 we set out to refocus and refresh our business by playing to our competitive advantages, aiming to deliver sustainable earnings growth over the full agricultural cycle,” he said.
“As we celebrate 180 years of supporting regional communities, I’m pleased to report a solid profit result for the year ending September 30, despite reduced summer cropping in many areas and a lower wool clip.”
Mr Allison said Elders continued to target acquisitions that met its strict investment criteria, with recent investments in Titan crop protection and Livestock in Transit delivery warranty products already proving their worth.
“In July this year, we announced the acquisition of Australian Independent Rural Retailers (AIRR) with completion scheduled for November 13,” he said.
“AIRR is an excellent strategic fit, providing Elders with another growth channel through entry into the wholesale rural services market.
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“The AIRR acquisition has the potential to add 20-25 per cent growth to Elders at the EBIT level on a full-year basis.
“The opportunities presented by our investment in AIRR, together with the ongoing consolidation occurring in the rural supplies market, positions Elders well to grow earnings in FY20 and beyond, and deliver increased value to our shareholders.”
Mr Allison said Elders would also continue to invest in innovation and technology, with key private and public sector collaborations helping ensure the benefits of research and development reach the farm gate.