Elders' profit rises as farm confidence swells
Agribusiness giant Elders has almost doubled its first half profit to $52 million with a stronger performance by all key divisions, as confidence soared in the agriculture sector after drought-breaking rains early this year.
The heavy rainfall in key farming districts in eastern Australia has boosted demand for Elders' products and services, and flowed through to its bottom line.
The contribution from its livestock operations rose thanks to strong cattle and sheep prices, as well as continued demand from export markets. Gross margin from the livestock division rose $10.5 million.
Good rainfall in farming districts since the beginning of the year has lifted confidence in the farm sector.
The contribution from the sale of rural products to farmers jumped substantially, partly due to the acquisition of the Australian Independent Rural Retailers (AIRR) wholesale business. The former AIRR business contributed more than $17 million to the gross margin of the rural products division since last November.
Other divisions also delivered greater earnings including the real estate services arm, and the Killara feedlot.
"Recent rainfall and soil moisture replenishment has boosted winter crop confidence, with increased demand particularly for chemical and Titan products. This has more than offset the poor summer crop season resulting from dry conditions year to date," Elders told the ASX.
Chief executive Mark Allison said Elders' strict financial discipline and solid business foundations had enabled it to prospered in a volatile market.
"The first half of financial year 2020 has been tumultuous, with devastating bushfires across large parts of Australia, the COVID-19 pandemic, and conversely, drought-breaking rain across many parts of Australia," he said.
"Whilst difficult, these events have proved yet again the resilience of our people and our industry, and our ability to rise to the challenge."
Mr Allison said COVID-19 had not had a significant impact on demand for Elders' services and products.
Elders' half year ended on March 31.
More to come