Drought and high dollar were the most repeated words in the half-year profit report for diversified industrial business Futuris (FCL), which posted an 18% fall in underlying profit for the period.
Futuris said its net profit after tax for the six months to December fell to $27.1 million from $33.1 million a year earlier.
After one off items, profit for the period rose 18%. This is taking into account the additional $10.1 million to the 2007 first half results from the since divested property division.
But the company, whose interests include Elders Rural Services, telecommunications, forestry and automotive divisions, said this is a good start in tough condition.
"All divisions have contributed to what is overall a good start and the best outlook that we have had for many years," chief executive Les Wozniczka said.
The profit to shareholders was recorded after net interest of $24.2 million compared with $15.6 million in the 2007 first half.
The company says the movement in net interest expense between the periods is explained by higher interest rates and debt levels.
The Elders Rural Services' contribution was $23 million, 70% than the same period last year, which came in at $13.5 million.
Despite the impact of the drought, Elders' overall grain sales volume grew by 20% to exceed 571,000 tonnes.
"The performance reflects significant attention to cost management and maximizing the opportunities where seasonal conditions were reasonable," said Wozniczka.
Elders financial services division in the form of Elders Rural Bank maintained a contribution of $9.7 million.
Wozniczka said the company expects to complete the sale of its 43% shareholding in Australian Agricultural Company (AAC) in the current year.
AAC yesterday posted a 64% decline in full year profits for the year ended December, due to effects of higher Australian dollar and drought.
For the 2008 financial year outlook, Futuris said it is targeting improvement on its 2007 record underlying conditions for the current financial year.
"Given appropriate seasonal conditions and MIS sales, an underlying result within the current range of market expectations is achievable," Wozniczka said.
Despite these reassurances, the stock fell by 7% to $2.00.
