Elders earnings tipped to rise 5-10 per cent

Elders is expecting underlying earnings to rise by 5-10 per cent as it tightens its belt and revenue kicks in from Australian Independent Rural Retailers.

Elders is expecting healthy growth in its earnings this year.

AGRIBUSINESS Elders is expecting growth in earnings of 5-10 per cent for the current financial year.

Addressing the company’s annual general meeting in Adelaide today, Elders managing director Mark Allison said the business was on track to meet its target of 5-10 per cent growth in underlying earnings before interest and tax to June next year.

Mr Allison said the company had internally appointed Nick Clark to a new position of business improvement general manager.

“Nick and his team will be working on multiple projects, which we expect to result in increased earnings of $3-5 million, together with a $10-20 million capital reduction on an annual basis,” he said.

Mr Allison said part of the growth in earnings from the acquisition of Australian Independent Rural Retailers announced in July.

“AIRR provides us with a large wholesale business with a proven history of growth, enhancing our logistics and distribution coverage,” he said.

“Independent rural retailers are very important to regional communities and AIRR gives us immediate access to that sector, as well as the hobby farm and produce sector.

“The enhanced geographic reach provided by AIRR also positions us well to take advantage of further industry consolidation, including an expected rationalisation of branches by our competitors in many areas.

“We expect AIRR to make a positive contribution from day one — not only from substantially increased earnings for Elders this year, but also from the synergies to be gained through this acquisition.”

Mr Allison was also expecting gains from the new relationship with Bendigo Bank, announced in November, 2018, but not put in place until March this year.

It meant about 90 Elders staff transitioned to Bendigo Bank but continued to operate financial services out of Elders branches.

“The new relationship reduces our employee cost base whilst securing a stable income stream in excess of $10 million per annum,” he said.