Increased profit in a solid result for Elders in 2012 first half
Elders has reported a statutory profit of $40.5 million for the 2012 first half to 31 March, up from a statutory loss of $(14.6) million reported for the 2011 first half.
The profit included one-off items totalling $34.4 million from the Company’s recent successful objection to the ATO’s Amended Tax Assessment, offset by other non-recurring items.
Underlying performance exclusive of these items was described as solid by CEO Malcolm Jackman.
“Rural Services’ results for the first half are solid given the circumstances. Trading activities, particularly our live export operations were the highlight” he said.
Malcolm Jackman said the benefits of a strong rebound in the contribution from trading operations had been more than offset by lower first half activity levels in Elders’ agency markets in livestock, wool and real estate.
“Network results were consistent with what would be expected given the deferral of activity and sales brought by flooding and falling fertiliser and AgChem prices. Notwithstanding this, our Farm Supplies sales and income continued to grow year-on-year,” he said.
Debt levels in the second half are expected to benefit from cash receipts received from the ATO for the Amended Tax Assessment and from the Company’s recent forestry assets sale agreement.
Other key improvements in Rural Services compared to the first half of 2011 were improved cash flow and lower inventory levels.
Malcolm Jackman said the good rainfall in the six months to March had provided a good basis for the second half.
“We have entered our peak Rural Services sales period with relatively good conditions and soil moisture, although rainfall since March has been below season’s averages in many regions. We are seeing ongoing recovery in crops such as cotton, rice and horticulture where growers have been able to consolidate their position with renewed water availability,” he said.
Malcolm Jackman said that while livestock agency is expected to continue to be challenging, the Company expects live export income to continue above 2011 levels based on execution of current orders.
Elders’ Futuris Automotive business reported a strong contribution, with a 15% increase in earnings to $5.4m, withstanding cuts to Australian volumes. Higher activity levels are expected in the second half.
“Activity levels in Automotive are expected to pick up in the second half, with the commencement of supply to new contracts in Thailand, China and North America,” Malcolm Jackman said.
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