Elders’ first-half profit slumped 34 per cent to $27.4 million due to hot and dry weather across the nation, but a return to average winter cropping conditions is cause for some optimism.
Revenue at the diversified agriculture firm fell 12.4 per cent to $737.5 million for the six months to March 31, with hot and dry conditions reducing summer cropping volumes as cattle prices ease, and the national wool clip shrinks.
Nonetheless, Elders’ chief executive and managing director Mark Allison maintained the company’s full-year underlying earnings outlook of $72 million to $75 million as stated at March 14, and the company has maintained its interim dividend of nine cents per share, fully franked.
“We have continued our commitment 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,” Mr Allison said on Monday.
Shares in Elders were 0.15 per cent higher at $6.59 at 10:55 AEST, still 25 per cent down on the $8.88 price a year ago.
Mr Allison said recent rain and the performance of its newly acquired Titan Ag business were encouraging signs.
“Return to average winter cropping conditions are expected, and increased retail earnings will flow from Titan as inventory held over the half year balance date is sold to producers for use with their winter crop,” Mr Allison said.
Elders’ financial services earnings are expected to increase in the second half due to a new rural bank arrangement and returns from increased shareholder loans to StockCo.
But both cattle and sheep volumes are expected to be lower due to limited supply, with sheep prices expected to remain high.
Supply of farmland property will continue to be subdued in line with livestock prices, however gains are expected from water broking activities.