Elders’ shares jumped sharply yesterday after it reported a solid underlying profit for the year to September and lifted final dividend.
In fact, the shares were up by more than 19% at the close to $8.87.
The shares jumped after the company confirmed that it’s businesses had not been badly damaged by the continuing drought across much of Eastern Australia.
Elders saw a 38% slide in a statutory profit of $71.6 million for the full year, which was ahead of analyst estimates.
While the profit was lower than $116 million last year, the 2017 figure includes a $38.3 million reversal in brand name impairments.
Net debt increased by $24 million to $161 million.
The final dividend was lifted to 9 cents a share from 7.5 cents, making a total for the year of 128 cents, up from 15 cents.
CEO Mark Allison says the overall retail business posted a $14.5 million margin improvement, contributed by acquisition growth in horticulture and organic growth in Southern Australia.
“Operating cash outflow of $12.1 million, compared to an inflow of $81.5 million last year, reflected higher retail debtors driven by strong sales late in the season and delay of receipts due to public holidays over the year-end. Additionally, dry conditions mean that inventory levels increased in certain areas,” the company told the market yesterday.
“Real Estate margin improved by $1.7 million to $33.6 million with the increase from footprint expansion offset by subdued activity in key residential markets,” the CEO said in yesterday’s statement.
“Elders’ Financial Services earnings were boosted by acquisitions and organic growth in loan book balances, rising from $35.1 million in FY17 to $38.3 million this reporting period.”
“The Feed and Processing margin increased across all business units, with Killara feedlot continuing to perform due to high utilisation levels driving efficiencies in cattle performance.”
“The Agency footprint expanded with the acquisition of Kerr & Co Livestock in December 2017, and the Retail business completed the acquisition of TitanAg which extends Elders’ participation in the supply chain for quality agricultural chemicals,” Mr. Allison said.
Based on the historical performance of TitanAg, Elders says it expects it will generate annualised additional EBIT of approximately $7 million in FY19 and beyond.
Looking ahead to 2020 and beyond, we will continue to demonstrate our strength in portfolio management, geographical segmenting, our core products, innovation, our commitment to Australian agribusiness and our clients,” Mr. Allison said yesterday.
