Shares in struggling rural services group Elders (ELD) jumped 5% yesterday after the company produced a better final result than those of the past couple of years.
Impressive as that 5% rise was, in a market which turned down early and sold off in late trading, the actual size of the rise was just a cent, to a closing level of 21c.
Thanks to years of cost cuts, asset sales and restructuring, plus a rise in live cattle exports to Asia, Elders posted the solid turnaround.
Elders yesterday reported a statutory net profit after tax of $3 million for the 12 months ended September 30, 2014, a huge improvement from the loss of $505 million a year ago.
Underlying net profit after tax was $8.8 million, up from a loss of $68.5 million, while the underlying earnings before interest and tax figure was $27.3 million, compared with the loss of $48.9 million in 2012-13.
The company has also slashed net debt by 46% to $138 million.
ELD 1Y – Elders returns to profit
The company said Elders’ core agency services business improved by 13% on the back of a recovery in livestock prices and higher volumes.
The live export services business also delivered a strong result because of strong demand from Asian markets.
Elders’ retail products business improved its gross margins even though there was lower demand for agricultural chemicals because of unseasonably dry weather conditions.
Elders said it generated $28.5 million in cost savings in the year, and was able to reduce working capital by 27%.
New CEO Mark Allison said Elders was working to more than double underlying earnings to $60 million by 2017, from the $278.3 million recorded in the latest year.
Mr Allison said the company would look to build on the improvements made to its business.
“Whilst our business will always be subject to the influence of seasonal and market conditions inherent in the agricultural sector, we need to manage the areas of the business that we can control.
“Now that we have the right foundation, we can focus on the structured implementation of our Eight Point Plan and work towards achieving our target of $60 million EBIT and 20 per cent return on capital in 2017,” Mr Allison said in yesterday’s statement.
