Elders’ financial performance is unsustainable, the agribusiness company’s chairman told shareholders today.
Mark Allison addressed the annual general meeting in Adelaide while also standing in for chief executive Malcolm Jackman who retired two weeks ago.
“The 2013 results are the poorest Elders has reported, regardless of whether performance is measured at the statutory, or underlying level,” Allison said.
“As is clear from the 2013 annual report, Elders has not performed as it should.
“While I have received encouragement from clients who express their appreciation and satisfaction with the service and advice they receive from Elders, the company’s financial performance is unsustainable.”
Allison said there were some positive signs ahead with a reasonable start to the current financial year as Elders returns to sole-play agribusiness after divesting itself from industrial conglomerate Futuris and selling off its forestry assets.
“Results such as these have led to the question ‘what now for Elders?’ amongst those who follow the company.
“Firstly, while the 2013 statutory loss reflects, to a large degree, the transition to an agriculture pure play, the underlying loss evidences the need for improved day to day management and performance from the business.
“Secondly, that your board believes that, given the appropriate capital and business management, Elders has the capacity to bridge the shortfall in its performance and to return Elders to being a sustainably profitable agribusiness.
“The transition of the company from an industrial conglomerate to a focused agribusiness has been accompanied by sustained progress in debt reduction.
“Over the course of 2013, Elders reduced its gross borrowings by $92 million to $295 million. This represents a reduction of 24 per cent on the previous year’s level and it has positioned the company for what is intended to be a final round of de-leveraging in the coming year.”
Allison outlined four strategies to improve performance in the areas of safety, capital management, operational performance and leadership.
He reported recent trading results that are “particularly pleasing”.
“Demand for Australian cattle remains strong in both short haul and long haul markets and our customers have continued to work in partnership with Elders.
“It is too early in the financial year and seasons to make a responsible call on full year earnings.
“But the year has begun well.”