Elders Posts Strong Half-Year Result with 67% EBIT Surge and $1.41Bn Revenue

About Elders Ltd

Elders Ltd (ASX: ELD) is a prominent agribusiness company in Australia. Their operations began in agriculture but has expanded into rural services, real estate and insurance. Their Australian Independent Rural Retailers (AIRR) provides collective buying power to over 250 members across Australia.

Elders Finance offers financial solutions from home and personal loans, banking accounts, term deposits and FMDs, to commercial and agribusiness loans. Elders Insurance operates over 200 locations, providing to Australians in regional and metropolitan locations.

Elders Real Estate have over +300 offices in capital cities and regional and rural locations, their services span residential and rural sales, commercial property, lifestyle and holiday rentals.

They also have numerous other national divisions including Elders Rural Services, Elders Weather (website & app), EPG Seeds, Pastoral Ag, Thomas Elder Consulting, Titan Ag and Turfcare Australia. Including these they have more divisions specific to NSW, Queensland, Victoria, South Australia, Western Australia and Tasmania.

Financial Performance

Elders reported a significant improvement in its financial performance for the half-year. The consolidated profit after tax attributable to parent entity members was $33.6M, a substantial increase from $11.6M in the previous corresponding period. Revenue for the period rose by 5% to $1.41Bn, driven by improved livestock prices and key acquisitions in Real Estate Services.

The company’s underlying earnings before interest and tax (EBIT) stood at $64.3M, reflecting a 67% increase from the previous year. Gross margin improved to $324.5M, supported by a recovery in livestock and real estate growth. The underlying cost base decreased by 3.6% due to strict cost management initiatives. Elders achieved a return on capital of 12.7% and an accounting leverage ratio of 1.7 times.

Total Assets increased 7.7% to $2.51Bn and among notable asset items, there was little change in Cash & Cash Equivalents (up to $40.22M from $40.21M), Trade & Other Receivables increased 4.02% to $931.3M, Inventory increased 25% to $499.42M, and Intangibles increased 5.68% to $568.63M.

Total Liabilities decreased 4.55% to $1.41Bn, with the most notable changes in Trade & Other Payables (+14.7%), Current Tax Payable (-100%), Interest-Bearing Loans & Borrowings (-47.8%), and Deferred Tax Liabilities (+152.86%). Total Equity increased by 29.17% to $1.09Bn.

Concerning cash flows, the most notable change was a decrease in net investing cash flows, which declined 40.48% from ($88.39M) to ($52.61M), and a decrease in net financing cash flows by 61.9% to $21.44M. Operating cash flows decreased 36% to $31.2M.

Investing cash flow as a net outflow was driven by capital expenditure and acquisition spending, as well as ongoing investment in transformation activities. Financing cash flow was driven by repayment of borrowings of $157M, dividends of $28.2M, post FY24 final dividend of 18 cents per share, an $28.9M payment for lease liabilities. This was partially offset by proceeds received from the share capital raise for the to be ACCC approved Delta Ag acquisition of $245.8M.

Elders declared an interim dividend of 18 cents per share, consistent with the previous period. The underlying earnings per share increased to 21.4 cents, demonstrating the company’s strong financial health and commitment to returning value to shareholders.

Cost Management and Capital Efficiency

Elders maintained strict cost management discipline, resulting in a 5% increase in costs to $260.2M, with $22.0M pertaining to acquisitions and growth-related activities. The company’s net debt decreased by 10% to $529.6M, supported by proceeds from a share capital raise for the Delta Ag acquisition.

Segment Performance

The Branch Network segment, which includes agricultural retail products, agency and real estate services, and financial services, reported sales revenue of $1.16Bn. The Wholesale Products segment, supported by the Australian Independent Rural Retailers (AIRR) business, contributed $184.2M in sales. The Feed and Processing Services segment, including Killara Feedlot, reported sales of $71.7M.

Net assets for the corresponding segments were reported at $963.43M, $213.09M, and $102.67M respectively.

Operational Highlights

Elders’ operational performance saw a recovery from the challenging prior period. Improved livestock prices were a key driver, enhancing sentiment and production margins in the livestock industry.

The company made significant acquisitions in Real Estate Services, contributing to improved earnings. Despite a decline in gross margin from Retail Products due to dry conditions, the overall performance was bolstered by strong sales in fertiliser and animal health products.

Their acquired interest in a number of real estate businesses amounted to a total consideration of $25M, including $10.4M of deferred consideration.

Sustainability and Diversity

Elders made progress on key sustainability milestones and initiatives, with improvements in diversity. Women comprised 45% of the workforce and 23% of leadership positions. The company was recognised as Australia’s most trusted agribusiness brand among farmers, with a net promoter score of 50.

Outlook

Elders expects a positive second half performance, with an average winter crop outlook and strong livestock prices supported by international demand for protein. The company plans to continue its commitment to the Eight Point Plan strategy, focusing on capital and cost efficiencies while investing in ongoing and future strategic initiatives.

Elders’ 1H25 report highlights a period of significant recovery and growth. The company’s acquisitions, cost management initiatives, and focus on sustainability and diversity have positioned it well for continued success in the agribusiness sector. With a positive outlook for the second half, Elders remains committed to delivering value to its shareholders and stakeholders.