National wool volumes to hit Elders results

Elders expects its 2019 first half results to March 31 to be lower than the prior corresponding period, when its earnings before interest and tax was $45.7 million.

ELDERS expects its 2019 first half results to March 31 to be lower than the prior corresponding period, when its earnings before interest and tax was $45.7 million.

But chief executive officer Mark Allison said the company still expected to be able to deliver underlying EBIT for the 12 months to September 30 in the range of $72 million to $75 million, which is similar to the 2018 financial year underlying EBIT of $74.6 million.

This is despite the challenges posed by the ongoing drought in the eastern states and flooding in northern Queensland.

Underlying net profit after tax for the 12 months to September 30 is expected to be in the range of $61 million to $64 million, also similar to 2018’s NPAT of $63.7 million.

Elders put out the update to the Australian Stock Exchange this week, on the back of recently released forecasts from the Bureau of Meteorology and ABARES.

Mr Allison said a major reason for the forecast lower first half results was lower wool volumes across Australia.

“There’s been a lot of competition between meat and wool sheep,” he said.

Elders chief executive Mark Allison.

Increased costs associated with the company’s footprint growth and reduced summer cropping are also cited as reasons for the lower first half forecast.

Retail earnings for the first half are expected to be consistent with the prior corresponding period.

Mr Allison said the forecast for similar full-year earnings would be dependent on good seasonal conditions this year.

“Our thinking is that it will be an average season, because you don’t tend to have drought across the whole of Australia,” he said.

“With an average season, we’ll be in a strong position to reach similar results to last year.

“We believe Elders remains well-placed to achieve our target of 5 per cent to 10 per cent EBIT growth, from 2017, through the agricultural cycle to 2020.”

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