Agribusiness Elders to halt live exports

Agribusiness giant Elders says poor margins and inefficiency mean it’s time to cease shipping live animals.

Cattle in Queensland wait to be exported overseas.

Agribusiness giant Elders has announced a stunning restructure that will see the group cease shipping live animals.

In an update to the market today, Elders (ELD) said a review had led it to immediately exit the long haul live export industry, while it will look to sell its short haul and airfreight operation.

The updates come in the wake of a tighter regulatory environment and red ink flowing in the long haul business — which focuses on cattle shipments to China — in the first half.

Elders said it would continue to participate in the live export industry by finding opportunities for its producer clients and accumulating cattle for exporters.

“A comprehensive review of our live export business has determined that poor margins and capital inefficiency in the long haul business warrant an immediate cessation of that business,” Elders chief executive Mark Allison said.

“While we continue to support our clients who participate in the live export industry, the export, logistics and shipping of live cattle to long haul destinations is no longer central to Elders’ strategy, which was devised when demand for live cattle from foreign markets was key to providing marketing options for Elders’ livestock producer clients.”

Elders said its short haul live export business, which trades as North Australian Cattle Company and sends cattle to Indonesia, Vietnam and Malaysia, offered limited long-term growth potential given the proliferation of competitors.

“The review has also concluded that our short haul sea export of feeder and slaughter cattle to Indonesia, Vietnam and Malaysia has remained viable notwithstanding extremely high Australian cattle prices, which has placed pressure on margins,” Mr Allison said.

“Accordingly, Elders has determined it will continue to conduct that business while preparing it for sale.”

The group said the actions would result in restructuring costs of around $6 million, with updated guidance of underlying pre-tax earnings of $54-$57m.

Elders delivered underlying pre-tax earnings of $45.8m last year.