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Elders to stop shipping live animals

Business

Agribusiness Elders has announced it will no longer undertake exports of live cattle to long-haul destinations, and will divest its short-haul and air-freight live animal export businesses.

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It will, however, continue to help its clients work with live exporters.

“A comprehensive review of our live export business has determined that poor margin and capital inefficiency in the long-haul business warrant an immediate cessation of that business,” Elders chief executive officer Mark Allison said in a statement to the ASX today.

“While we continue to support our clients who participate in the live export industry, the export, logistics and shipping of live cattle to long-haul destinations is no longer central to Elders’ strategy, which was devised when demand for live cattle from foreign markets was key to providing marketing options for Elders’ livestock producer clients.”

The SA-based business, which describes itself as a pioneer in the live export of cattle from Australia to Asia, reported a loss of $2.9 million from its live export business in the six months to March 30, 2016. Around $3.8 million of that was attributable to the long-haul business.

Elders said it had determined that its strength no longer lay in the “logistics of shipping live animals”, but rather “in finding opportunities with live exporters for its producer clients and accumulation of cattle for exporters”.

Currently, most of Elders’ long-haul business involves sea shipments of dairy and beef breeder cattle to China, while its short-haul sea export involves feeder and slaughter cattle sent to Indonesia, Vietnam and Malaysia.

After adjusting for the costs to be incurred in the exit from the live export sector, Elders expects its underlying earnings before interest and tax for the full year to September 30, 2016, to be between $54 million and $57 million.

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