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ELD

Elders Limited FY19 Full Year Results Was Flat

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Elders Limited (ASX: ELD) is a leading agribusiness throughout rural and regional Australia. Elders’s primary goal is to help grow agriculture business in Australia. Elders services include, rural services, financial planning, real estate, insurance and home loans. Elders have a market capitalisation of A$858 million.

elders ltd

What are the main results of Elders FY19 report?

  • Sales revenue for FY19 is A$1,667 million, up 4% from the previous year.
  • Underlying EBIT for FY19 is A$73.7 million, down 1% from the previous year.
  • Underlying profit after tax for FY19 is A$63.6 million, in line with the previous year.
  • Operating cash flow for FY19 is A$11 million, up 193% from the previous year.
  • Underlying earnings per share (cents) for FY19 is 52.6, down 4% from the previous year.

What are the drivers of this result?

Elders FY19 result is flat and in line with the previous year. The few key points is that rural products was down 6% from the previous year. Agency services was down 5.2% from the previous year. Financial services was down 6.3% from the previous year. These slight reductions in performances was offset by a 10.2% increase in acquisitions (predominantly include earnings from TitanAg and Livestock in Transit (LIT) delivery warranty products) that caused Elders FY19 result to be in line with the previous year.

What is the outlook for Elders?

Elders management notes that with the recent acquisitions in FY19, these new acquisitions should lift company results in FY20.

Elders management notes their expectations for FY20 are as follows:

Rural Products

  • Reduced summer cropping as dry conditions persist across north eastern and southern Australia, whilst winter cropping will increase but remain below long-term average.

Agency Services

  • Australian beef production and export volumes are projected to decrease due to reduced slaughter rates and a rebuild of the national herd, while low cattle supply and strong demand in China will increase prices
  • Uplift in Australian sheep flock to be supported by strong sheep prices, which are forecasted to rise to historical highs duetostrong saleyard competition and increased demand from China.

Real Estate Services

  • Demand for farmland property to remain strong.

Financial services

  • Financial Services to benefit from a full year of earning from Livestock in Transit (LIT) and Wool in Transit (WIT) delivery warranty products.

Feed and Processing

  • Killara feedlot earnings continue to be maintained through high utilisation, easing feed costs and improved efficiencies.

What is the market reaction?

The initial market reaction to Elders FY19 full year results is positive. Today, Elders share price is up around 5.5% cent and is currently trading at around A$6.40 (11 November). Elders has a P/E ratio around low-teens and an annual dividend yield of 3% (fully franked).

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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