Elders Limited released its half year results for the six months to 31 March 2018, delivering improved statutory and underlying profit, while maintaining above target return on capital.
Statutory net profit after tax of $41.4 million compares with a $38.3 million profit in the prior corresponding period. Underlying net profit has improved $4.5 million on the prior corresponding period to $39.7 million.
Underlying earnings before interest and tax (EBIT) of $45.7 million were driven by continued strong performance in the Retail business and additional earnings through bolt-on acquisitions.
Average net debt over the six month period was $143 million, broadly in line with the prior corresponding period, reflecting strong conversion of profit to cash. The Company’s balance sheet reflects continued improvement across leverage, interest cover and gearing ratios.
Elders’ Chief Executive Officer and Managing Director, Mark Allison, said that the half year results reflect the Company’s commitment to the strategic Eight Point Plan and the resolve to achieve continuous high quality growth.
“We are focused on improving our service offering for clients and delivering value to shareholders. We now have a solid and stable platform to capitalise on the many opportunities that lie ahead for Elders and Australian agribusiness,” he said.
“Continued strength in the Retail business was driven by a combination of organic growth across southern Australia and the acquisition of Ace Ohlsson (a horticulture supplies business based in New South Wales), which has resulted in a $9.4 million improvement in margin.”
“Strong wool performance and additional sheep earnings from Agency acquisitions, offset by declining cattle prices and volumes resulted in a $0.7 million uplift in Agency margins.”
“Real Estate gross margin increased $0.7 million, with margins from acquisitions largely offset by a decline in farm land property earnings, resulting from limited supply of property stock.”
“Similarly, Financial Services gross margins were boosted by earnings from the StockCo and Elders Insurance acquisitions and increased productivity across the portfolio, resulting in an increase of $2.7 million on the prior corresponding period.”
Increased competition for young cattle at the Killara feedlot resulted in a slight reduction in margins in the Feed and Processing business.
Elders’ return on capital remains above the 20 percent target, at 28.2 percent. This is largely driven by continued strong agency and retail earnings and stable capital levels.
Mr Allison said Elders is delivering on all key priorities set out in the Eight Point Plan, including in safety performance.
“Our lost time injuries reduced from five to two, with a 96 percent decrease in days lost. We continue to strive for an injury free workplace based on our risk based decision making training and development, and a continued emphasis on employee and community safety, health and wellbeing.”
“Key relationships have also strengthened across the board. We’ve continued to work with retail key suppliers, and have improved our position in the Western Australian fertiliser market.”
Elders continues to develop and improve digital and technical service offerings to assist clients in making data driven decisions to increase the productivity and profitability of their businesses.
“From a growth viewpoint, we have continued to do what we said we would do, in line with our aim of 50 percent organic and 50 percent acquisition growth plans.”
