Agribusiness Elders says initiatives undertaken so far as part of a major plan to improve the performance of the company are making progress.
“Whilst it is still early days and most of the initiatives will deliver value in future years, progress is being made,” chief executive Mark Allison told shareholders at the company’s annual general meeting today.
Under its three-year, eight-point strategic plan launched in July, Elders is seeking to achieve $60 million in earnings before interest and tax by fiscal 2017, and a 20 per cent return on capital.
Shareholders heard that Elders expects a dry spring and summer for most of Australia and was assuming an average winter cropping season.
The ongoing drought in northern Australia would continue to place pressure on Elders’ livestock clients, but strong feedlot and live export demand was expected to continue.
Meanwhile, the agribusiness is to examine its brand following recent research which revealed a negative perception of Elders, associated with poor financial performance and the perception that it was no longer “local”.
It is also considering options to develop a wholesale business model and aggressively expand its online platforms.
Allison said Elders’ agency operations in livestock, wool, grain and real estate – which are the largest part of the group’s business – had the greatest opportunity for improvement and growth.
Pay for livestock and wool employees was being re-aligned to reward high performers and to drive sales.
A new minimum activity performance indicator had also been introduced for agency employees.
In real estate, Elders had launched a push to lift the number of franchise offices by 25 per cent.
In feed and processing services, Elders was seeking to replicate its Indonesian model of feedlot, abattoir and top-end beef brand in other markets, including China and Vietnam. The live export business was a significant growth opportunity, with strong demand for cattle in Indonesia, Vietnam and China.
Fellow agribusiness GrainCorp is also holding its AGM today, with shareholders told the grains handler and marketer is facing a challenging year ahead. It is expecting smaller crops, dry weather and tough competition from its rivals.
GrainCorp said estimates for crop production in Australia’s eastern states were below normal.
“We have another relatively dry winter behind us and have largely finished receiving a second consecutive, smaller crop, where market competition has never been more intense,” chairman Don Taylor said.
In a slide presentation by chief executive Mark Palmquist, GrainCorp said the estimated production of wheat, barley, canola and sorghum in eastern Australia for fiscal 2015 was below the norm.
Lower production meant there was significant competition for grain in eastern Australia, and GrainCorp was looking for opportunities to acquire additional grain from overseas.
