Busy branches help lift Elders profit to $51.6m

Underlying net profit has improved $13.2m on the prior year to $41.2m.

Booming cattle prices and much improved seasonal conditions during the past six months have driven much of the retail kick and rural property sales activity.

Strong growth is also occurring in the residential sales market for Elders, which just two years ago was still reporting full-year losses after a near-death experience with debt and the global financial crisis.

Underlying return on capital has jumped about 6.5pc to 28.4pc, primarily driven by improved earnings before income tax (EBIT), lower working capital balances in the retail product business, and careful capital spending across the business.

Elders’ managing director, Mark Allison. said the 2015-16 results reflected solid progress against the revived agribusiness company’s long term strategy and focus.

“It is evident the business and our key stakeholders are responding well to our strategic priorities, and that we are well structured to capitalise on seasonal conditions,” he said.

Positive seasonal conditions had lifted winter crop demand and sales activity to generate a $15.1m improvement in underlying profit.

High cattle prices had driven higher livestock earnings and demand for large cattle farming properties, contributing to a $5.2m underlying profit improvement for the company’s agency services business and a $1.7m underlying profit lift for real estate”.

The company’s recent decision to buy back 10pc of Elders Insurance (Underwriting Agency) from QBE, as well as an increase in finance sales through StockCo (also now part-owned by Elders) contributed to a $800,000 million underlying profit lift for the financial services division.

However the surging cattle market has adversely impacted margins within Elders lotfeeding business at Killara on the Liverpool Plains and resulted in reduced occupancy levels at the Killara feedlot.

Strong operating cash inflows had combined with and disciplined capital spending to reduce net debt has declined to 36pc to 86.1m.

Spare funds not used to buy back all the company’s listed hybrid securities were also re-directed to paying down debt.

“The key drivers of our growth – our employees –  continue to show improved engagement and enablement levels year on year,” Mr Allison said.

“Our customers, in turn, are responding and we are enjoying significant improvement in our customer satisfaction levels in 2016.

“As we progress into our final year of the Eight Point Plan, we are now in a position to reset our strategic intent and focus on our path to 2020 as a profitable agribusiness.

“Clear opportunities exist for us to grow our digital and technical services offering, adding further value and productivity for our stakeholders.”

Mr Allison said Elders continues to deliver against business priorities and its Eight Point Plan in 2016, most notably the Company’s safety performance.

“Our continued focus on building a safe and healthy workplace has reduced our Lost Time Injuries (LTI) from 14 to 4 in the last 12 months, and the LTI Frequency Rate (LTIFR) from 3.4 to 1.0. We firmly believe that managers who take safety seriously show the discipline and focus required to run a business well in all respects.”

“Our operational performance continues to improve through a clear and strategic decision making process.”

“In the past 12 months we’ve made significant progress towards our client relationships, delivering a new online client community to gain ongoing and real-time market research and customer satisfaction insights.”

“We’ve also made progress with our supplier relationships, forming a new agreement with CSBP in Western Australia for fertiliser supply, and securing supplier registrations for Elders home branded products.”

“Now, more than ever, we are focussed on efficiency and growth, and ensuring Elders is positioned as Australia’s leading agribusiness. As a result, we have expanded our presence in Tasmania, successfully integrated several acquisitions across real estate, agency, retail, and financial services and we have launched a new Elders Grain platform.”