Rural agency operations drive Elders’ turnaround
Elders’ traditional rural agency operations have made the greatest contribution to the company’s turnaround in underlying profit, as announced in its half year results today.
The company released its interim results for the six months to 31 March 2014 which revealed an underlying profit of $6.7 million, a turnaround of $30.4 million on the loss of $23.7 million in the previous corresponding period.
Elders Chief Executive Officer Mark Allison said the half year results represent an early milestone in the journey to becoming a profitable and sustainable agribusiness.
“We’ve moved from generating losses to generating profit and it is pleasing that every part of the business delivered improved results – despite variable seasonal conditions,” he said.
“Our rural agency operations, including livestock, wool, grain and real estate, made the greatest contribution to margin growth due to drought induced volume growth, strong sheep prices and higher turnover in broadacre and residential real estate markets.
“Good demand in both long haul and short haul live export markets and increased feedlot demand due to dry conditions also contributed to margin growth.
“While we know that further improvement is required, these results are encouraging as they show the business is responding to management and that staff are working hard to turn the business around,” he said.
Other notable features of the results include a further reduction in net debt, down 25 percent to $236.6m, realisation of cost savings from the 2013 restructure, and increase in operating cash flows and a reduction in working capital.
Mr Allison said Elders expected the trend of improvement to continue in the company’s second half.
“On balance, seasonal and market conditions are positive. Recent rainfall has provided a good start to the winter cropping season. Cattle prices are recovering, sheep prices are strong and feedlot and live export demand continues to be healthy. The second half is still looking positive and we expect ongoing improvement against last year’s results,” he said.