Elders shares plummet
CEO exit, crop uncertainty linked to fall in value
SHARES in agribusiness titan Elders dived almost 23 per cent on Monday after the company announced the retirement of its long-serving chief executive Mark Allison and heavy rain had created uncertainty around the summer and winter crop harvests.
The company’s profit jumped 9 per cent to $162.9m in the 12 months to September 30.
This compared with analysts consensus estimates of $169.1m.
Meanwhile, revenue surged 35 per cent to $3.45bn, following a bumper year for farm commodities. But investors dumped the company’s shares, which fell 22.94 per cent per cent to $10.21 at the close.
Mr Allison – who joined Elders in 2009, initially serving as chairman before becoming managing director in 2014 – announced he would retire from the company in 12 months.
A successor has yet to be appointed, with Elders’ board saying it has started an executive search at “both national and international level”.
Mr Allison, 61, said he expected “high demand” for agricultural commodities will continue in the next six months but warned of uncertainty in the year ahead, following the severe wet weather from the third consecutive La Nina.
“Recent extreme rainfall events across the eastern states have created some uncertainty in affected cropping regions and concern about reaching full harvest potential for both summer and winter crops,” he said.
“The rural products outlook remains positive, with high demand particularly for agricultural chemicals, fertiliser and seed. However, the agricultural industry will await assessment of the full impact of the extreme wet conditions and flood events to realign expectations for the FY23 season.”
Mr Allison also said cattle and sheep prices were expected to soften in the medium term, driven by falls in domestic re-stocker demand, with “volumes also balancing out in the short term”.
“The wool market is expected to remain strong, driven by increased demand in China and Europe, pending production conditions improving following recent wet conditions and flood events in eastern Australia.”
Overall, earnings before interest and tax jumped 39 per cent to $231.1m, with the company delivering a return on capital of 26.2 per cent – a 3.7 per cent improvement on the previous year.