Elders on the long road back

Cash is king, according to Elders chief executive Malcolm Jackman.

Mr Jackamn told delegates at last week’s company annual general meeting in Adelaide that the embattled business is back on the long road to recovery.

He said Elders had to be a capital light, high performance company.

“Focusing on capital, cash and sales addresses our key aspirations for returns and growth, ” Mr Jackman said. “Cash is king and everyone in the business knows it.”

Elders is taking a proactive approach to rebuilding trust with farmers and has become a foundation partner of the 2012 Australian Year of the Farmer.

“Extreme seasonal conditions all over the country had impacted trading conditions in 2010, however the results to November are encouraging for improved returns for the rest of the financial year, ” Mr Jackman said.

Chairman John Ballard addressed shareholders about the company’s figures.

“Elders recorded a statutory loss of $217.6 million for the twelve months to September 2010, ” he said.

“Rural services sales revenue was some $260 million below prospectus forecasts.”

This shortfall raised three fundamental questions, including why the gap between prospectus and end result is so significant, what changes have been made to enable Elders to deal with market conditions and when can shareholders expect improved share price performance.

“The realisation of underlying profit forecasts anticipated in the prospectus was prevented by the shortfall in sales revenue generated by rural services and forestry operations, ” Mr Ballard said.

Elders’ principal challenge in 2010 was the low-price, low-margin environment which transpired.

Rural services are now trending positively, the company said, driven by better seasonal conditions and more recently by rising confidence levels.

“Forestry is in the midst of a structural rationalisation and a downturn in woodfibre demand that is expected to turn positive some time in the ensuing 12 to 18 months, ” Mr Ballard said.

“Those within Elders hold a great sense of pride in the company’s 170 year history and its contribution to the development of the nation’s rural sector.”