Elders hits purple patch

Emphasis now on growth after massive turnaround in profit

AGRIBUSINESS Elders is focusing on growth, having completed a “profound” turnaround with a $38.3 million full-year profit.

The result for fiscal 2015 unveiled by the company yesterday was a dramatic turnaround on the $3 million it posted a year earlier.

Elders’ agency services business – providing marketing options for livestock, real estate, wool and grain – was a standout performer thanks to higher livestock prices, and an increase in cattle numbers and wool volumes.

Chief executive Mark Allison described the profit turnaround as “profound”, saying progress on most aspects of the company’s improvement plan had been solid.

“Our sense is that we can now draw the line on the turnaround of Elders and now focus fully and totally on a profitable, high-return-on-capital growth program for Elders,” Mr Allison said.

Elders is developing new retail and livestock online channels and exploring new live export markets.

Also, the company has developed branded meat products for markets in China and Indonesia, and is now looking to expand into Vietnam over the next year.

In fiscal 2015, volumes of cattle and sheep were high as producers took advantage of strong prices and sold animals in drought-affected areas.

Strong overseas demand for Australian beef and cattle along with tight supply are expected to keep prices high.

A lower Australia dollar and the emergence of the Vietnam market helped Elders’ live export operations during the year. But that was partly offset by softer demand for dairy cattle from China and reduced quotas in Indonesia.

Mr Allison said Elders was not interested in maintaining market share in the live export business for the sake of it. Instead, it was focused on making profitable shipments of cattle and sheep while maintaining animal welfare.

Elders said earnings from its retail operations – farm supplies and fertiliser – lifted in fiscal 2015’s second half.

However, the prospect of a strong El Niño bringing dry weather could reduce demand for farm inputs, Elders warned.