Rain is having a beneficial impact on the outlook for Futuris Corp, the rural services group which yesterday reported a six per cent rise in interim net profit to $33.1 million from $31.1 million.
The company said in a statement that it is ‘comfortable with the range of market forecasts for its full year underlying profit ‘ after “starting the year well”.
“The 2007 interim result is stronger than anticipated at the time of the AGM and it is customary for the Company to earn approximately two-thirds of its annual income in the six months to June. Recent rainfall and climatic indications are positive, as is the progress being made by ITC (Integrated Tree Cropping).
“The timing and quality of a recovery in seasonal conditions can have a material financial impact.
“It is still early in the company’s annual profit emergence cycle which remains subject to seasonal conditions, MIS sales and AACo’s results. (AAC reported a sharp drop in early of 43 per cent earlier this week)
Futuris said it would issue its usual fourth quarter earnings update, once seasonal trends become evident.
CEO Les Wozniczka said the better than anticipated interim followed gains in financial services, forestry and property enabling the company to offset the impact of the drought and poor returns from the automotive business.
“All business units held to challenging cost targets and we are well poised to benefit from an upturn in seasonal and market conditions,” he said.
The impact of the drought was felt hardest in the Elders rural bank joint venture, with underlying earnings before interest and tax (EBIT) of $33 million compared to $41.7 million in the previous first half.
Elders Financial Services lifted its EBIT contribution to $16.8 million from $10.7 million previously, while the forestry and property operations also lifted their EBIT with ITC’s EBIT jumping 39 per cent to $13.9 million in the half.
EBIT from property operations rose to $10.3 million for the period, compared to a loss of $1.7 million in the previous first half and the automotive operations contributed an EBIT of $5.6 million.
Futuris, which had earlier announced the sale of its property development operations to Aspen Group for $234 million, maintained interim payout at four cents per share, fully franked.
The shares traded roughly steady, finishing at $2.16, well down on the high of last year of $2.38.
The company is a candidate for a private equity approach according to some optimistic punters. The sale of the property business is a sign the board has its own ideas about focusing the activities of the company.
