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Booming prices drive Elders profit surge

Business

South Australian agribusiness Elders has announced a half-year net profit of $90 million on the back of booming property, fertiliser and livestock prices.

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The listed company, which reported a decade-high net profit of $149.8 million for its 2021 financial year in November, is on track to easily eclipse last year’s strong result and will pay shareholders an interim dividend of 28 cents per share.

Elders’ share price has jumped about 10 per cent since yesterday’s results announcement to $15.03 at 11am, its highest level since 2009.

In the half-year results for the six months to 31 March 2022, Elders outperformed the 2021 first half in all product areas and geographies.

The listed company’s total sales revenue for the half reached $1.514 billion, up 38 per cent on the same period last year.

This was led by Rural Products, with sales up $312.9 million and Wholesale Product sales, which increased by $46.7 million.

“Growth across the Rural Products business has been driven by strong demand for fertiliser and crop protection products following favourable seasonal conditions across key cropping regions,” the company said in its results statement.

Agency Services improved gross margins to $82.2 million, largely driven by high livestock prices that more than offset reduced volume caused by favourable seasonal conditions.

Real Estate Services contributed a gross margin of $33.3 million, up 38 per cent with significant transaction growth in farmland agency, residential agency and property management operations.

The 80 per cent overall growth in earnings before interest and taxes (EBIT) for the half has prompted the Adelaide-based company to upgrade its full-year Underlying EBIT guidance to 30 per cent to 40 per cent above the prior fiscal year, which was $166.5 million.

Managing director and chief executive officer Mark Allison said Elders expected to benefit from a positive winter cropping outlook with sufficient soil moisture for improved production in the second half.

“The strong first-half performance has continued in April and we now expect to deliver full-year 2022 Underlying EBIT in the range of 30 per cent to 40 per cent above full-year 2021 Underlying EBIT,” he said.

“Cattle and sheep prices are expected to remain high, benefitting the Agency business and offsetting anticipated lower volumes resulting from feed availability and livestock restocking.

“Current awaiting settlement volumes and buyer demand indicate that Real Estate Services will continue to outperform against the prior year.

“The outlook is bright for the remainder of 2022 for Elders, its shareholders and its customers.”

Formed in 1839, Elders has a market capitalisation of more than $2.3 billion and was ranked No. 10 in InDaily’s 2021 South Australian Business Index of the state’s top 100 companies.

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