Elders records strong financial results, signifies bright outlook for Australian agriculture sector
Australian agribusiness Elders (ASX:ELD) today released its results for the 12 months to 30 September 2021.
Elders reported a decade high statutory profit after tax of $149.8 million. Underlying earnings before interest and tax (EBIT) of $166.5 million and underlying earnings per share (EPS) of 96.7 cents both increased by 38% compared to FY20.
Financial performance improved across all geographic and product areas in FY21, with the exception of the Feed and Processing business which was challenged by higher feeder cattle prices.
Key highlights of the FY21 results include:
- Sales of $2,548.9 million, up 22%
- Gross margin of $529 million, up 21%
- Rural Products gross margin increase from 13.4% to 14.1%, including 36% growth in gross margin contribution from AgChem sales, where margins continue to grow through backward integration strategy and other business improvement initiatives
- Agency services outperformed despite lower volumes, contributing gross margin of $140.0 million, up 10%
- Real Estate turnover of $3,129.9 million, up 39%
- Strong recovery of our wool business with gross margin of $15.9 million, up 44%
Elders Wholesale business contributed $61.2 million in gross margin in its first full year of operation post acquisition.
- Reduction in debt and improvement of leverage, interest cover and gearing ratios
Elders declared a final dividend of 22 cents per share (20% franked) taking total dividends declared for the year to 42 cents partially franked (20%), compared to 22 cents (fully franked) in FY20.
Chief Executive Officer and Managing Director, Mark Allison, said that the results are a strong start to the Company’s third Eight Point Plan and reflect a feeling of optimism within the business and sector.
“It is an exciting time to be in agriculture as our industry continues to respond to the enormous increase in global demand for quality and safe Australian agricultural produce,” said Mr Allison.
“The outlook is extremely positive and we intend to be there to support our customers to increase their productivity sustainably and grow their enterprises.”
Mr Allison said that sustainability is a key focus of the business.
“Elders have invested in a dedicated sustainability team and have been working hard to identify opportunities to mitigate environmental impacts and take a leading position on sustainability within the agricultural industry.”
“Our strategy continues to evolve and our work aligning our climate-related disclosures with the Task Force on Climate-related Financial Disclosures continues. We have recently announced the following targets, and are actively working to achieve them:
- 100% renewable electricity in all Australian sites by 2025
- 50% reduction in Scope 1and 2 emissions intensity (tCO2e/$m) by 2030, against a baseline year of 2021 (subject to commercially viable technology being available to address feedlot cattle emissions and consideration of investment in carbon offsets)
- Net Zero Scope 1 and 2 emissions by 2050”.
Full details on our targets and strategy can be found in our Sustainability Report, available at Elders Investor Centre.
Growing our business and people
Elders’ branch footprint has grown again in FY21 and welcomed many talented client facing people and technical service advisers into the business.
“Our acquisition activity has added several Rural Products and Real Estate businesses to the Elders family,” says Mr Allison.
“We will continue to target strategic geographic and product gaps through organic and acquisitive initiatives in order to grow the network further.”
“As we grow, it is imperative that we continue to invest in developing our existing team and maintaining our One Elders culture to remain rural Australia’s most trusted agribusiness.”