Elders’ profit and dividends up as farms rebound from drought
Australian agriculture’s accelerating recovery from devastating drought, record cattle prices and a key acquisition have helped propel agribusiness giant Elders to a $123 million net profit, up 80 per cent on last year.
The $1.85 billion ASX-listed company will reward shareholders with a bigger fully franked final dividend as a result, up 44 per cent to 13 cents per share.
Elders’ underlying profit of $109 million for the 2019-20 financial year eclipsed market expectations, with Bloomberg consensus forecasting an underlying profit of $101.3 million.
The historic agricultural company sells farm merchandise such as fencing equipment, fertilisers and chemicals, runs a real estate division and provides sales and marketing services for wool, cattle and other farm produce.
Elders’ result is in stark contrast to the performance of many other ASX-listed companies throughout 2020, with many forced to withdraw earnings guidance, pause dividends and raise capital as demand for their products slumped due to COVID-19.
Elders chief executive Mark Allison said the company’s performance was an example of the business delivering “great returns in good years”.
He also said it reflected Elders’ nimble response to challenges that arose during the year, the implementation of a sound business strategy, solid business foundations and strict financial discipline.
“Our financial year 2020 results highlight the resilience of our business, the benefits of our diversification across both geographies and products, and our acquisition strategy,” he said.
During the year Elders completed the purchase of another farm supplies business known as AIRR. The purchase added $44 million in wholesale gross margin to the company’s results.
Revenue rose 29 per cent to $2.09 billion, which was just ahead of Bloomberg consensus at $2.06 billion.
Elders’ share price has surged through 2020, closing at $11.87 on Friday, up 83.5 per cent over the calendar year. The S&P/ASX200 meanwhile is down 4.2 per cent over the same period.
Elders’ financial year ends on September 30.
Darren is the mining and agribusiness reporter for The Age and The Sydney Morning Herald.
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