Elders has announced a net profit after tax of $27.4 million for the six months to March 31 compared with $41.4 million profit in the previous year.
Elders will continue to deliver on its Eight Point Plan initiatives despite the reduced activity in agriculture due to the hot and dry conditions across Australia.
Elders also announced a fully franked interim dividend of 9 cents per share.
Statutory net profit after tax of $27.4 million compares with a $41.4 million profit in the prior corresponding period (pcp). Underlying net profit, compared with pcp, decreased by $13.3 million to $26.4 million.
Underlying earnings before interest and tax (EBIT) of $33.5 million ($45.8 million pcp) reflected lower wool volumes, increases in costs associated with footprint growth, and continued investment in digital and technology areas.
Operating cash outflow of $13.1 million, included investment in increased Titan chemical inventory levels which will support backward integration initiatives and earnings in the second half. Variability of livestock activity around balance date also impacted the half year cashflow.
Year to date average net debt rose by $81 million to $224 million at March 2019, as a result of investment in Titan, including working capital, and other bolt on acquisitions, and increased retail balances carried due to the seasonal conditions. Return on capital was impacted by the same factors.
Elders’ Chief Executive Officer and Managing Director, Mark Allison, said “we have continued our commitment to the Eight Point Plan and the resolve to achieve continuous high quality growth, despite the very difficult conditions being experienced by the Australian agriculture sector, including many of Elders’ clients, in the first half of the year.”
“Consistent with our philosophy that keeping our people safe is our top priority, and is an indicator of how well the business is being run, our target remains an injury free workplace. Notwithstanding that target, in the first half of 2019, our lost time injuries (LTIs) were one, up from nil at the same time last year.”
Mr Allison said Elders was striving for an injury free workplace through risk based decision making, training and development, and a continued emphasis on employee and community safety, health and wellbeing.
Turning to the operations of the business, Mr Allison said “Despite reduced summer crop plantings and production, the Retail business showed resilience through geographical diversification and other growth initiatives including backward integration through Titan.”
“While Agency gross margin was down $3.1 million, this was largely due to Wool performance which followed the market as as whole with lower volumes due to dry conditions and lower sheep levels. Livestock earnings were impacted by lower cattle prices, however higher cattle volumes from dry conditions and lack of feed offset this. Additionally, our sheep business improved in both volumes, due to our bolt on acquisition strategy, and prices.”
“In Financial Services, the commencement of the new Rural Bank arrangement during March will provide a secure revenue stream for the life of the contract (with lower margin offset by lower costs). Approximately 95 Agri Finance relationship managers and support staff transferred employment from Elders to Rural Bank successfully with minimal impact to client experience and service.”
https://eldersrural.com.au/2019-first-half-financial-results/
