Elders boosted earnings sharply in the year to September, with a solid rise in revenue and top-line earnings, thanks mostly to the breaking of the drought across large areas of the country and rising demand for cattle.
The company revealed a fully franked final dividend of 13 cents a share (up 44%) took the full-year payout to 22 cents a share, up 4 cents from 2018-19.
Elders reported statutory profit after tax of $122.9 million. Underlying earnings before interest and tax (EBIT) of $119.4 million was up 62% on the previous year.
“The result was driven by gross margin growth across all state geographies and products, combined with continued cost control and capital allocation discipline,” Elders said in Monday’s announcement.
“The performance of our Rural Products division was a highlight. The acquisition and integration of leading rural supplies wholesaler AIRR added $44.0 million in wholesale gross margin, well in excess of acquisition business case projections.”
Elders said it also made excellent progress on its backward integration strategy, selling more of its own branded products at higher margins.
“Within Agency Services, higher livestock prices provided upside and more than offset the soft wool market.
“Our Real Estate Services division achieved strong growth in both broadacre and residential property turnover.
“Financial Services delivered above acquisition case growth for the Livestock in Transit delivery warranty product.”
Elders’ CEO Mark Allison said the company overcame a number of challenges in the year from bushfires to the breaking of the drought (which meant additional working capital needs) and pandemic.
“Our solid business foundations and strict financial discipline, together with a commitment to ensuring the safety and prosperity of clients, communities, and staff across Australia allowed us to succeed despite challenging operating conditions in FY20,” Mr. Allison said.
“When the COVID-19 pandemic emerged, we proactively established a COVID-19 Response Committee that convened almost daily to monitor the evolving situation and respond swiftly.
“We focussed on minimising the risk to our employees and the communities we operate in whilst also ensuring we could continue to serve our clients and play our part in keeping the food supply chain operating,” he said.
Elders also revealed that it had canceled its $50 million working capital facility (set up in May) to ensure the business had sufficient balance sheet headroom to withstand potential business interruptions as a result of the pandemic.
“Six months later, Elders has experienced no material business impact from COVID-19 and consequently, the facility has not been utilised since its inception. With low levels of community transmission, advances in contact tracing, and progress towards a vaccine, the facility is now surplus to Elders’ needs and has been canceled,” the company said.
