A solid reaction in a falling market yesterday to the 2015-16 full year results from agribusiness group, Elders Ltd (ELD) which met earnings guidance for the year to September.
For the 12 months to September 30, net profit after tax lifted 35% to $51.6 million, while underlying earnings jumped 47% to $41.2 million.
The group’s underlying pre-tax earnings — which forms the basis of its forecasts — was up 39% to $56.2 million and at the top end of recently-lowered guidance of $54-$57m million.
Revenue rose 9% to $1.425 billion for the year to the end of September.
The shares were up 4.2% at the close at $3.95.
Investors took heart from the promise by the company that dividends would resume being paid in December of next year at a payout ratio of 35% of net profit after tax.
That means the company won’t be paying an interim for the March half year, but the full year announcement in 12 times will reveal details of the first return to shareholders for some years.
Chief executive Mark Allison said the group benefited from progress with a strategic plan first implemented in 2014, as well as favourable weather.
“In FY16, positive seasonal conditions lifted winter crop demand and sales activity, resulting in our retail product posting a $15.1 million improvement in underlying profit,” he said in yesterday’s statement.
“High cattle prices have driven higher livestock earnings and also real estate sales demand for large cattle farming properties, contributing to a $5.2 million underlying profit improvement for Agency Services, and a $1.7 million underlying profit improvement in Real Estate Services.”
“Our 10% acquisition in Elders Insurance (Underwriting Agency) Pty Ltd from QBE, as well as an increase in sales of the StockCo livestock finishing finance product contributed to a $0.8 million underlying profit improvement for Financial Services.”
“High Australian cattle prices adversely impacted margins within our Feed and Processing Services, and resulted in reduced occupancy at the Killara feedlot.
The company announced a major restructure in September that would see the group live animal shipments with its long haul export business already closed and its short haul arm to be sold off.
Elders said yesterday the short haul unit sale was “progressing with a number of parties”.
Mr Allison also expressed confidence about the upcoming year, although stopped short of offering guidance.
“As we progress into our final year of the eight point plan, we are now in a position to reset our strategic intent and focus on our path to 2020 as a profitable agribusiness,” he said.
“Clear opportunities exist for us to grow our digital and technical services offering, adding further value and productivity for our stakeholders.”
Elders said the capital simplification strategy remains on track, successfully completing a $97 million equity capital raise through which Elders’ wholly owned subsidiary, Elders Finance Pty Ltd acquired 705,585 Elders Hybrid securities for a total of $67 million. Elders Finance now owns 72% of all Elders Hybrids on issue.
