Elders has upgraded its full year guidance after a strong first half

Elders is delivering strong results across the board, contributing to a 34 per cent jump in profits and upgraded earnings guidance.

Elders has delivered a “standout performance across the board’’, with before tax profits up 80 per cent, and there’s more growth to come, with the company upgrading its full year outlook.

The company is also on the takeover trail, with managing director Mark Allison telling an investor briefing that the company had 17 active candidates in its acquisition pipeline.

The Adelaide-based agribusiness’s shares jumped more than 7 per cent on the release of the company’s first half results on Monday, up 98c to $14.68.

Chief financial officer Tania Foster told an investor briefing that the company had delivered a 33.4 per cent annual total shareholder return for the past five years, and shareholders would be rewarded with a 40 per cent increase in the interim dividend to 28c per share, 30 per cent franked.

Ms Foster said the company had delivered a “standout performance across the board” with the company outperforming the 2021 first half in all product areas and geographies.

“This has been led by rural products, with sales up $312.9 million (47 per cent), and wholesale product sales up $46.7 million (27 per cent),’’ the company said in a statement to the ASX.

“Growth across the rural products business has been driven by strong demand for fertiliser and crop protection products following favourable seasonal conditions across key cropping regions.’’

Elders managing director Mark Allison. Picture: Daniel Purvis.

Elders’ first half revenue was $1.51bn, up 38 per cent, while net profit was $91.2m, up 34 per cent.

The full year underlying EBIT guidance has been upgraded to 30-40 per cent above the previous full year, replacing guidance issued in March for a 20-30 per cent uplift.

Elders in 2021 started the first year of its third Eight Point Plan, targeting 5-10 per cent growth in pre-tax earnings and earnings per share, and had “significantly outperformed those targets’’, Mr Allison said.

“Lower cash flow in the first half reflects that we have built an inventory position to allow us to meet anticipated increases in winter cropping demand,,’’ Mr Allison said.

“Consistent with last financial year, we are targeting 90 per cent cash conversion for the full year.

“Cattle and sheep prices are expected to remain high, benefiting the agency business and offsetting anticipated lower volumes resulting from feed availability and livestock restocking.

“Current awaiting settlement volumes and buyer demand indicate that real estate services will continue to outperform against the prior year.

“The outlook is bright for the remainder of 2022 for Elders, its shareholders and its customers.’’

Mr Allison told an investor call that the company was anticipating “very. very positive’’ trading conditions through to 2023-24.

“The key drivers whether it be from ag markets, whether it’s commodities remain very, very strong,’’ he said.

“And I think our sense is that conditions will continue to be very strong for 18 months to two years.’’

Elders made five acquisitions in the first half, and M Allison said the pipeline remained strong, with 17 candidates currently being looked at.

“And there’s quite a replenishing pipeline,’’ Mr Allison said.

“There’s a constant stream of founders who are now looking at succession where the children might not be involved in succession for many reasons ... so this is where we get our pipeline.’’