Elders Ltd's share price shot up yesterday after a stunning lift in expected profits for the year.
Cashed-up farmers have been racing into their Elders stores ahead of time to buy up critical farm inputs "seeking to mitigate the risk of instability in supply chains".
That's just one of the reasons for the surprise profit lift, according to Elders' managing director and chief executive Mark Allison.
"We have seen improvement in our retail and wholesale segments compared with the same time last financial year due to increased sales and favourable seasonal conditions in most parts of Australia," he told the Australian Stock Exchange.
Elders now expects its profit this financial year will be up to a third higher than last year.
The agribusiness reported a $149.8 million profit last financial year, a 22pc rise on the year before in a big turnaround for the once struggling company.
There was big trade in shares yesterday, more than 2.1m shares changed hands, and investors drove prices up by more than a dollar to $13.32.
Mr Allison said it was now forecast the company's result would be 20 to 30 per cent above the earnings (before interest and tax) of the previous year.
The 2021 financial year result (EBIT) was $166.6m so the new forecast places the expected result at about $200-$216m for 2022.
Mr Allison said the profit guidance was an estimate as the company was only five months into its financial year.
Older investors may remember when Elders' share price was limping along at less than 10 cents apiece a decade ago.
Mr Allison said Elders' performance so far this financial year has been strong and exceeds its performance after the first five months of last year.
MORE READING: Last year's profit announcement.
"After finalisation of the February trading numbers, which continue improved earnings for the first quarter, we now believe we will exceed analysts' consensus for the full year to September 30," he said.
"Our agency business continues to perform strongly as a result of high prices in both sheep and cattle, offset to some extent by lower volumes due to restocking and the good availability of feed on farm.
"Real estate is also exceeding expectations due to increased turnover and high demand," he said.
Farm record prices have been set across Australia in the past two years.
Cattle prices are at record highs with sheep not far behind.
"The increase in activity is due to a combination of market and seasonal factors, acquisition growth and organic growth," Mr Allison said.
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