All That Investors Need To Know About Elders Limited’s Market Update

All That Investors Need To Know About Elders Limited’s Market Update

Elders Limited (ASX: ELD), a company from the consumer staples sector which has over 175 years of agribusiness knowledge, experience, and advice for its clients, continues to focus on its future as a pure agribusiness both within Australia and abroad.

In spite of challenging weather conditions with an ongoing drought in the eastern states and flooding in northern Queensland, keeping in the mind the forecast from the Australian Bureau of Meteorology (ABM) and the Australian Bureau of Agricultural and Resource Economics and Science (ABARES), the company expects that they would be able to deliver an underlying EBIT to be in range between $72 million and $75 million.

They expect their underlying net profit after tax for 12 months ending 30 September 2019 to be in the range of $61 million to $64 million. The company expects that the results during the first half of the FY2019 for the period ending 31 March 2019 would be materially lower than its previous corresponding period EBIT of $45.7 million. The reason is mainly due to lower wool volume followed by an increase in the cost related to footprint growth and continued Eight Point Plan investment.

The company expects that the retail earnings in the first half would be consistent with the prior corresponding period. The summer cropping is expected to get reduced which will get balanced by the growth initiatives along with the backward integration through Titan.

By the end of FY2018, the lost time injuries decreased from 6 to 5. The underlying net profit after tax was up by $5.3 million to $63.7 million. The underlying EBITDA was up by $4.3 million to $79 million. The underlying EBIT was $74.6 million due to continued strong performance in its retail business. In FY18, the cash outflow came in at $12.1 million which is down from a cash inflow of $81.6 million the prior year, which was driven by strong sales late in the season followed by a delay of receipts due to public holidays over the year-end. Elders Limited declared a dividend of 9 cents per share (100% franked).

After the financial year FY2018 ending 30 September 2018, the company entered into a new arrangement with the Rural bank on the terms of a new exclusive relationship subject to a certain customary condition precedent, effective from 4 March 2019. From 4 March 2019, the existing agreement between both the parties will get replaced with a new relationship agreement for nine years.

In the last five years, the stock generated a return of 613.57%. However, during the previous 6 months, the stock generated a negative return of 15.56%. At present, the shares of Elders Limited are trading at A$5.955 (AEST: 3:35 pm, 15 March 2019), down by 2.06% as compared to the previous trading day’s closing price. The company has a market capitalization of A$709.76 million and approximately 116.74 million outstanding shares.


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