Elders bails out of Asia

Indonesian feedlot venture on the block

AGRICULTURAL specialist Elders has decided to sell its underperforming feedlot and processing assets in Indonesia, and will extend its chemicals business and livestock agency operations in Australia.

Elders Indonesia operates a feedlot with a capacity of about 8200 head of stock, as well as an abattoir.

The company has decided to sell the assets following a performance review that showed they were not delivering a suitable return.

“High cattle costs and changing Indonesian governmental policies have adversely affected the performance of our Indonesian business, making it appropriate to divest these assets,” Elders chief Mark Allison said yesterday.

Mr Allison said Elders would still have a presence in Indonesia – along with China and Vietnam – through retail meat distribution businesses.

Exiting the Indonesia feedlot and processing facilities would allow the group to redirect capital to the retail meat distribution business in Indonesia, and to initiatives better aligned with Elders’ acquisition strategy, he said. The company says it hopes to complete the sale of the Indonesian assets to Pramana Austindo Mahardika by the end of June.

Elders also said yesterday it was set to buy Kerr & Co Livestock – the biggest privately owned independent livestock business in southwest Victoria.

Based in Hamilton, Kerr & Co handled about 416,000 sheep and 16,000 cattle last financial year.

Mr Allison said the acquisition of Kerr & Co Livestock would enable Elders to increase its agency business in a valuable livestock region.

The deal is expected to be wrapped up by May 1.

Separately, Elders has agreed to buy Titan Ag, an Australia-based producer and supplier of crop protection and animal health chemicals and fertiliser, which has been selling its products in Australia through Elders.

That business is expected to generate earnings of $6.5 million to $7.5 million in its first full year under Elders’ ownership. The buyout is also due to be complete by the start of next month.

Shares in Elders rallied on the revelations, closing 28c up yesterday at $7.99.