Elders Profit Up As Dividends Return
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No wonder Elders shares went for a big run yesterday - the company is paying its first dividends in nine years after more than doubling net profit for 2016-17.
Elders told the ASX yesterday that net profit for the year to September 30 jumped 125% to $116 million as the company boosted its profits across its product range, made strategic acquisitions and benefited from the reversal of a non-cash impairment on the Elders brand name.
Underlying profit lifted by $16.5 million or 40%, to $57.7 million. Revenue from continuing operations up 6% to $1.6 billion, indicating the company’s profit margin fattened during the year.
And the company is looking to growth further with plans for 20 new branches and a stronger presence in horticulture and viticulture. The company will focus on Victoria and New South Wales where Elders sees gaps in the market in places such as the western districts in Victoria and central NSW.
The company’s shares ended the day up 8% at $5.60.
The company is paying a final dividend of 7.5 cents a share plus a special dividend, also at 7.5 cents a share. CEO Mark Allison said the 15 cents a share will likely be the starting pint for dividends in 2017-18.
Mr Allison said the profit results and dividends reflected good progress under the company's improvement program which has been running for three years.
“It is pleasing that we have been able to declare a final and special dividend, which are Elders’ first shareholder dividends since 2008,” Mr Allison said in a statement to the ASX yesterday.
Mr Allison said normal summer cropping conditions and geographical expansion, including the acquisition of NSW-based horticultural business Ace Ohlsson, had boosted Elders' retail business.
He said cattle and sheep prices were strong (along with wool prices), which helped boost margins for the agency services business.
In fact high livestock prices and low interest rates generated more demand for large cattle-farming and broadacre cropping properties, which lifted Elders’ real estate business.
The purchase of a stake in the StockCo livestock financing business and an extra 10% interest in Elders Insurance also helped lift margins for Elders’ financial services operations.
Elders said its feed and processing services increased profits through greater use of the Killara Feedlot and better paddock procurement strategies.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.