Adelaide-based agribusiness group, Futuris Corp expects its 2009 underlying net profit to be at the lower end of market expectations.
Chairman Stephen Gerlach told yesterday’s annual general meeting in Adelaide that the company’s earnings are strongly weighted to the second half of its financial year, and the seasonal nature of its business, earnings projections are highly conditional.
"This year’s position is even more unclear as the timing and progress of our non-core asset divestment program can affect full year underlying earnings," he said.
"In addition, it is still too early to assess what flow-on impact will arise from the global financial crisis.
"However, as things stand today, our expectation is that full year underlying net profit to shareholders will approximate the lower end of the current range of market expectations."
"This full year result is expected to comprise a substantially lower first half profit, chiefly due to the impact of business transformation project costs on Elders.
"However, benefits arising from the program are expected to accumulate in the six months to June and provide added impetus to the Company’s traditionally strong second half.
"More importantly, our earnings outlook for 2010 is anticipated to be much improved through the contribution from a reinvigorated and leaner Elders," Mr Gerlach said.
Futuris posted an underlying net profit before one-offs of $84.2 million in 2007/08, down from $106.4 million in the prior year.
Its reported net profit was $36.4 million, down from $105.4 million.
Mr Gerlach said 2008 was a very challenging year for the company.
But he stressed that the Elders, Elders Rural Bank, Elders Insurance and ITC businesses had been strong.
"More recently, the company-specific events I described in my address have been overshadowed by those currently affecting the international economy.
"In the face of unprecedented financial market volatility, Elders, Elders Rural Bank, Elders Insurance and ITC have all been shown to be strong, soundly-based and of growing significance in their markets. They are managed by an enthusiastic and capable team of managers.
"Our task at Futuris remains to provide shareholders with the best risk adjusted return possible from the capital invested.
"Futuris has underperformed in that respect. But through refocusing our strategy and concentrating our attention, capital and resources to our core performing businesses we expect to achieve improved earnings and share price performance, relative to market over the coming two to three years.
"Futuris is changing, as it needs to. Our incoming CEO has been mandated to effect the changes necessary for your Company to consistently deliver superior performance and to realise the potential within its current assets as Australia’s leading agribusiness."
That new CEO, Malcolm Jackman, who took over from Les Wozniczka after he resigned in June, told the meeting he would work to simplify the company’s corporate structure and strengthen its balance sheet.
The shares dipped 3c to close at $1.10.
In Sydney, fund manager, Perpetual Ltd says its earnings outlook is in line with consensus but the company’s management cautioned yesterday that market volatility could still have an impact on results. Chairman Robert Savage told the AGM that analysts were forecasting an EBITDA range of between $174 and $205 million and an operating profit after tax of between $97-$118 million for the full year to June 30, 2009.
"The consensus is based on market conditions and funds under management as at the end of September," Mr Savage told shareholders at the company’s annual general meeting.
"Whilst we are of the view that our outlook is in line with current consensus, I must again caution that conditions are changing rapidly and we expect that the volatility of the market in the near-term could affect both market consensus and our outlook prior to the end of the first half at December 31.
"We clearly have a robust balance sheet and almost no debt and this will provide us with the basis to weather the period, and position us well to capitalise on opportunities which may evolve once this current crisis abates.
"As always, should our outlook diverge materially from consensus, we will advise the market."
Mr Savage said the core of Perpetual’s business was robust and the fundamentals of the industry were strong and the performances of Perpetual’s leading Australian equities funds have been above their respective benchmarks.
“Our conservative investment style has performed well in the current market environment. I am also very pleased to report that our International Share Fund now sits in the top performance quartile of global equities funds in Australia over one and three year periods. This augurs well for the future growth prospects of this business.”
Perpetual’s Chief Executive Officer, Mr David Deverall said Perpetual was always reluctant to make predictions about the direction of the stock market. However, the current environment is clearly one of increased uncertainty and warranted some comment.
“The financial climate is without precedent in recent times with the scale of financial rescues and government intervention surpassing even the most pessimistic forecasts six months ago.
"While we do not want to be complacent given the magnitude of events we feel the environment is becoming increasingly attractive for investing in equities on a three to five year view.
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