ELDERS SHRUGS OFF RURAL WOES
Agribusiness’ shares up 13pc
ELDERS shares jumped more than 13 per cent after the agribusiness lifted full-year underlying profit 9.1 per cent to $63.7 million, shrugging off the worst of the east coast drought with a strong retail performance.
Net profit for the 12 months to September 30 dropped 38 per cent to $71.6 million, following the acquisitions of chemical supplier TitanAg and real estate agency Kerr and Co, but revenue increased 2 per cent to $1.61 billion.
While falling cattle prices hit the company’s livestock agency division, margins at its retail unit rose 11 per cent despite a dry winter cropping season thanks to the acquisitions in horticulture as well as organic growth.
Chief executive Mark Allison said the company had shielded itself from the worst impacts of the drought.
“At a local level, it is certainly very tough for many parts of the country,” he said.
“From a business viewpoint, the level of diversification ... from a product and geography perspective means the overall impact has been limited.”
Elders shares were up 13.5 per cent to $8.41 at 12.25pm yesterday. They closed the day at $8.81.
In yesterday’s report, Elders said real estate, financial services and feed and processing improved during the year, while solid wool performance and increased sheep volumes partially offset the decline in livestock agency revenue.
TitanAg is expected to deliver a $7 million in earnings in the coming year, but Elders did warn a drought-affected summer cropping regime across eastern Australia would impact demand for fertiliser and crop protection products.
Cattle prices are also expected to ease further as production increases, but lamb prices are set to rise on strong export demand.
Revenue gains are also expected from water broking activities, even though farmland property supply is set to mirror a flat cattle market.
The company will pay a fully franked final dividend of 9.0 cents, up from 7.5 cents a year ago.