Elders yet to appoint new CEO, warns of 18.1pc full year earnings fall as it cuts interim dividend

The agribusiness giant is yet to find a successor to CEO Mark Allison, six months after flagging his retirement. Its shares dived 13 per cent.

Elders’s board has yet to appoint a successor for long-serving chief executive Mark Allison. Image by Daniel Purvis.

Elders is expecting full-year earnings to slump more than 18 per cent as it warns of “softer” cattle and lamb prices as well as an easing in the farm property market.

The ASX-listed agribusiness giant is expecting to deliver earnings before interest and tax of $180-200m. At the midpoint, this represents a 18.1 per cent fall on last year but a 13.8 per cent gain on 2021.

It comes as Elders is yet to appoint a successor to long-serving chief executive Mark Allison, who announced his retirement last November, and the company’s profit slumped 46 per cent to $48.84m in the six months to March 31.

Chairman Ian Wilton said: “The process of identifying a suitable successor to Mark Allison as CEO of Elders is continuing. The board expects to make a further announcement in July.“

Elders cut its interim dividend from 28c to 23c a share, 30 per cent franked, which it will pay on June 22.

The company’s shares dived 13.25 per cent to $7.20 on Monday, giving it a market value of $1.29bn. This compared with a 0.1 per cent dip across the broader sharemarket.

Mr Allison said the earnings result was “satisfactory given the market and seasonal conditions, especially in the flood impacted” first quarter. Overall interim revenue firmed 9 per cent to $1.66bn.

“The 2022 financial year was unusual with EBIT greater in the first half than the second, primarily because clients brought forward their winter crop procurement due to supply concerns and rising input prices,” he said.

“The freeing up of supply chains, lower freight costs and more sustainable fertiliser prices are a great benefit to the agricultural industry but make comparison between HY23 and HY22 challenging.

“Consequently, Elders has taken the decision to provide full-year guidance to reinforce our expectation that second half earnings are likely to exceed the first half, a more typical earnings profile for Elders. We look forward to the second half given the strong winter crop outlook.”

Mr Allison described the agricultural industry as volatile, citing “softened livestock trading conditions, weaker crop input prices and unseasonably wet weather.”

“This contrasts with the exceptionally favourable HY22 trading conditions which saw firmer livestock prices, a strong real estate market and ahead-of-season client procurement for winter crop, in response to the global supply chain uncertainty at that time.”

Agency services earnings dived 22 per cent, fuelled by lower cattle and sheep prices.

Wholesale products meanwhile jumped 5 per cent to $10.2m. “This increase was offset by declining crop input prices throughout the period, placing downward pressure on gross margin, particularly glyphosate,” Mr Allison said.

He said cattle prices were “expected to remain subdued” in the second half, citing “recent improvement” in US beef import prices. Lamb prices were expected to “remain under pressure given mixed quality and higher volumes”, and across its real estate business, softer broadacre market conditions were expected to persist.

But Mr Allison said residential rural property remained robust despite elevated interest rates and inflation. “Property management is expected to remain strong, supported by the acquisition of six offices in NSW,” he said.

“Demand for food and fibre remains strong globally and Elders’ long-term earning potential persists with equal strength.

“We remain confident in the strategic foundations and principles set for Elders under its Eight Point Plan and its ability to deliver expected earnings and shareholder value at full year.

“Elders has strengthened its leadership team with executive appointments that bring the skills and vision required to grow the business over the coming years and enable us to better service existing and new customers.”