Shares in rural giant Elders jumped 11% at one stage yesterday after a strong result for the six months to the end of March which also saw the company lift its full year earnings guidance.
Revenue jumped 38% to $1.514.8 billion as the company rode the breaking of the drought and the vastly improved outlook for rural commodities.
That saw Elders deliver an 80% jump in EBIT to $132.8 million and 34% increase in net profit after tax to $91.2 million.
This strong profit growth allowed the Elders board to declare a 30% franked 28 cents a share interim dividend, which is up 40% year on year.
Elders said it saw growth across all product areas and geographies.
The best was its Rural Products business, which reported a 47% jump in sales to $312.9 million. This reflects strong demand for fertiliser and crop protection products following favourable seasonal conditions across major cropping regions.
CEO Mark Allison is confident the good times can continue. He said on Monday he sees the buoyant conditions in the agricultural sector for the next 18 months to two years, with demand for fertilisers and cropping chemicals strong, and cattle and sheep prices staying high.
He also said he thought Elders estate division which he says is unlikely to be curtailed by rising interest rates.
In light of the company’s improved first half performance during the first half and strong start to the current second half, Elders management upgraded its earnings guidance for the year to September.
Mr Allison explained in the release on Monday, “The strong first half performance has continued in April and we now expect to deliver full year 2022 Underlying EBIT in the range of 30% to 40% above full year 2021 Underlying EBIT. This expectation replaces the guidance we gave to the market on 14 March 2022.”
But as usual Elders warned that this guidance was subject to caveats such as potential supply chain disruptions as a result of COVID-19 and geopolitical events, unexpected changes to seasonal conditions and severe weather events, and unexpected changes in commodity prices.
The strong result from Elders continues the good report from the sector after solid updates from GrainCorp, Incitec Pivot and Nufarm and Australian Agricultural Co.
Elders shares ended 8.9% higher at $14.92. The day’s high of $15.32 hit in trading was a year high.
