Elders’ earnings slump to $170 million still the second-highest result in 10 years for the agribusiness major

Australian agribusiness Elders has reported a 26 per cent drop in its earnings before interest and tax for the 2023 financial year to $170.8 million, which was the second-highest EBIT recorded by the company in ten years.

Elders released its results for the 12 months to September 30, 2023, in which it recorded a strong FY23 earnings performance despite adverse market headwinds, including softening input prices for key agricultural chemicals, and significant decline in livestock prices, as well as inflationary pressures and rising interest rates.

Elders managing director and chief executive Mark Allison said the financial performance was “resilient” considering the company met with “challenging trading conditions”.

“This resilience was achieved due to our geographically diverse multi-product portfolio, which generated strong average earnings across the group.

“We did not compromise on financial discipline to achieve this result, with operating cash flow at a new inflow of $169.2m, resulting in a cash conversion of 163 per cent, which well exceeds the target benchmark of 90 per cent set out in our capital management framework.

“This allowed us to declare dividends totalling 46 cents per share.”

Elders recorded a statutory net profit after tax of $100.8m, down 38 per cent compared to the prior year, and underlying return on capital of 16 per cent, which exceeds the target benchmark of 15 per cent in the Eight Point Plan.

The directors determined to pay a dividend of 23 cents per share, 30 per cent franked.

In the 2023 financial year Elders entered the final year of its third Eight Point Plan, targeting 5-10 per cent growth in EBIT and EPS through the agricultural cycles while maintaining strong financial discipline to generate a compelling ROC of at least 15 per cent.

Mr Allison said the company remained committed to business transformation projects which were expected to deliver short and long-term benefits, including Systems Modernisation and Elders Wool.

“The new Elders Wool business reached significant milestones with practical completion of the Ravenhall facility in Victoria and the opening of the Rockingham facility, delivering an improved level of customer service in Western Australia,” Mr Allison said.