Elders HY24 earnings at $38.4M down 54pc from HY23

Grain Central, May 20, 2024

LEADING Australian agribusiness Elders today released its half-year results for the six months to March 31, which include underlying earnings before interest and tax (EBIT) of $38.4 million, down 54 percent from the HY23 figure of $82.8M.

In a statement to the ASX, Elders’ noted its HY24 performance was influenced by challenging seasonal conditions, cautious client sentiment, softening crop-input prices, and lower livestock prices.

Trading in the second quarter improved from the first quarter, following an uplift in client sentiment, supported by unforecast widespread rain across many regions in eastern and southern Australia.

Livestock prices recovered strongly throughout the half, in line with improved seasonal conditions, which have also assisted the outlook for the 2024 winter crop and Elders’ second half.

Following is a summary of Elders’ performance by segment:

Retail Products was impacted by crop protection and fertiliser sales which were back on the prior year, driven by lower input prices, partially offset by an uplift in animal health and seed categories. Elders achieved volume growth across all products, indicative of market share growth in this business unit.

Wholesale Products achieved margin uplift in animal health products, partially offset by lower crop protection sales, which continues to be adversely impacted by lower input prices compared to the prior period.

Agency Services margin decreased because of lower livestock prices compared to the prior period, partially offset by improved volumes evident across cattle and sheep. The result was despite improvement in cattle and sheep prices at 61pc and 42pc respectively experienced since the end of FY23.

The contribution from Agency Services improved significantly in the second quarter, supported by a material recovery in cattle and sheep prices.

Real Estate Services margin grew, predominantly due to improved residential turnover and property-management earn which benefited from acquisitions and ongoing rent roll growth.

Financial Services earnings uplift due to the improved performance of Elders Insurance business (20pc Elders) and Elders Home Loans. This was partially offset by the Livestock in Transit (LIT) Delivery Warranty margin, which continues to be subdued, in line with reduced livestock turnover.

Feed and Processing Services margin uplift benefited from increased occupancy and throughput, with gross margin per head up compared to the prior year.

FY24 Outlook

Elders expects better trading conditions during the second half of FY24, as client sentiment continues to improve following a return to average seasonal conditions.

This improved sentiment is forecast to positively impact the outlook for winter-crop and livestock production.

“Elders will continue to invest in strategic initiatives, in line with our Eight Point Plan strategy, while maintaining a focus on cost and capital efficiency,” the company stated.

“A return to average seasonal conditions in the second half, with generally favourable soil-moisture profiles and improving client sentiment following the end of El Niño, is expected to have a positive impact on the Rural Products business.

“The outlook for Agency Services is forecast to remain positive for the remainder of FY24.

“Livestock prices are forecast to stabilise, supported by the improving seasonal outlook and strong demand from international markets. Elders’ wool handling facilities in Perth and Melbourne are now operational with continued volume uplift forecast in the second half of FY24.”

In Real Estate, softer broadacre market conditions are expected to improve in line with the recent increase in livestock prices.

Residential markets are forecast to remain robust assuming interest rates remain stable.

Property management is expected to remain strong, supported by recent acquisitions.

Financial Services is expected to continue benefiting from equity accounted investments, in particular Elders Insurance and ongoing uptake of livestock funding.

“As outlined in our trading update on 8 April 2024, Elders was impacted in the first half by below average seasonal conditions which resulted in subdued client sentiment and lower crop protection and livestock prices against the prior period,” Elders managing director and chief executive officer Mark Allison said.

“Earnings improved in the second quarter, in line with a more favourable operating environment, and we are confident in a stronger second half with a return to average seasonal conditions and improved outlook for winter crop and livestock production.”

“As a leading agribusiness we expect fluctuations in our operating environment; our response remains to focus on the controllable.

“This includes a commitment to a tightly managed cost base and a geographically diverse multi-product portfolio, to deliver strong earnings and value for shareholders through the cycles.”

In line with its ASX announcement on April 8, Elders expects FY24 underlying EBIT to be between $120M and $140M.

Source: Elders


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