- Agribusiness giant Elders is performing well today despite announcing an annual profit drop over the 2019 financial year
- Net profits slipped almost four per cent, but underlying profits stayed flat on last year
- Some strong purchases over the year helped keep revenue afloat and investors happy
- Looking ahead, Elders expects more challenging summer conditions but for things to ease up in the winter
- Company shares are up roughly six per cent at midday trade, and worth $6.41 each
Agribusiness giant Elders is enjoying a healthy boost in its share price today, despite net profits for FY19 slipping nearly four per cent.
While net profits came in at $68.9 million compared to last year’s $71.6 million, underlying profits for the 12 months leading up to September remained flat.
Elders still managed to bag a four per cent increase in sales revenue to $1.67 billion in the face of continued drought woes. Still, the company’s Rural Products, Agency Services, and Financial Services divisions still fell into the red.
Elders’ saving grace over the course of the year was the several purchases made in the 12 months — namely TitanAg, Ace Ohlson, and Kerr & Co Livestock.
Combined with increased earnings from the introduction of the Livestock-in-Transit (LiT) delivery warranty, revenue from these buys helped prop up annual earnings.
Elders’ takeover of Australian Independent Rural Retailers (AIRR) is still underway, and the company said once finalised this will set Elders up for some strong scale and growth opportunities.
Company CEO and Managing Director Mark Allison said the strong revenue in spite of a tough year is a testament to Elders’ ability to pick out profitable purchases.
“Our results in FY19 showed the benefits of pursuing acquisitions that meet our strict investment criteria,” Mark said.
“Looking ahead, we will continue to seek agriculture-focused partnerships and events, looking to sponsor those focusing on innovation and sustainable farming practices,” he said.
Moving forward, Elders said it expects a continued struggle for summer crops, but the average winter crop seasonal conditions should help lighten the load and provide a solid platform for business.
The company is forking out another fully-franked nine-cent dividend to investors, bringing the payout for the full year to 18 cents per share, which is the same as last year.
Elders shares hit an early peak in morning trade, but have since settled slightly. Shares are up 6.02 per cent to be worth $6.42 each in a $910.81 million market cap.