This article is from the Australian Property Journal archive
SHARES in ASX-listed agribusiness Elders slumped after the announcement that CEO Mark Allison would be retiring, and that high demand for agricultural commodities would be tempered by the impacts of wild wet weather on eastern seaboard crops.
The company reported a small increase in underlying profit after tax for $152.2 million and a post-tax statutory profit of 9% to $162.9 million, helped by fertiliser and crop protection chemicals margins.
Underlying profit before tax was up 42% to $223.5 million and revenue was up 35% to $3.45 billion. Elders announced a 27% final dividend payout increase.
Allison will have left his role as managing director and CEO, which he has held since May 2014, within 12 months.
“The timing is right, and will allow for a smooth transition and leadership refresh for Elders’ next phase of growth,” he said.
The board said an executive search has commenced at both national and international level, but the market responded with uncertainty after Allison steered the 1839-founded company’s journey into a pure-play agricultural business after it nearly collapsed in the global financial crisis under $1.4 billion in debt.
Elders’ share price had closed on Friday at $13.25 and closed at $10.21.
Its agency services contribution grew due to strong livestock prices, despite reduced volumes from limited domestic supply, with gross margin lifting 4% to $147.0 million. Real estate services’ gross margin jumped 21% to $61.6 million, which it said reflected ongoing network expansion and continued very high demand for both residential and farmland assets despite a fourth quarter market easing.
“Strong demand for broadacre properties is expected to continue in the short to medium term, supported by commodity demand and high livestock prices,” it said, adding that it has an “encouraging” pipeline of acquisition prospects in strategically relevant locations and is also pursuing new greenfield opportunities to expand its service offering to clients.
Elders said high demand for agricultural commodities is expected to create favourable trading conditions in the first half of FY23, however recent extreme rainfall events across the eastern states have created “some uncertainty in affected cropping regions and concern about reaching full harvest potential for both summer and winter crops”.
The rural products business outperformed expectations with gross margin up 35% to $383.1 million, and its outlook remains positive, with high demand particularly for agricultural chemicals, fertiliser and seed.
“However, the agricultural industry will await assessment of the full impact of the extreme wet conditions and flood events to realign expectations for the FY23 season,” it said.
Cattle and sheep prices are expected to soften in the medium term due to falls in domestic re-stocker demand, with volumes also balancing out in the short term. Increased demand in China and Europe will keep the wool market strong, pending production conditions improving following recent the wet conditions and flood events.
