Elders posts strong result despite pandemic and bushfire disruption

Agribusiness giant Elders has unveiled robust half-year results, despite the impact of COVID-19 and bushfires across large parts of Australia.

Underlying earnings before interest and tax was 90 per cent higher than a year earlier at $52.8 million. The company said the result reflected a solid performance from the Rural Products division, with gross margins boosted by recent winter crop confidence, high prices for cattle and sheep, and steady earnings in Real Estate and Financial Services.

Elders chief executive Mark Allison said rock solid business foundations, strict financial discipline, and a commitment to prioritising the safety and prosperity of clients and communities across Australia helped the company fare well in volatile conditions.

“The first half of FY20 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.

“Successive rainfall events across major cropping areas on the East Coast have had a positive impact on operational performance within the last period, lifting farmer confidence and driving strong demand for crop inputs.”

Elders said COVID-19 had not had a significant financial impact on demand for its products and services, customers and supply chains for the six months ending March 31, and that had continued into April and May.

But it added the coronavirus implications would continue to create some ongoing uncertainty in both market demand and agricultural supply chains.

Some domestic AgChem suppliers are experiencing interruptions due to COVID-19, which is being closely monitored, but China AgChem supply chains have returned to normal, Elders said.

The company said while government restrictions on gatherings and social distancing measures have had the potential to impact real estate, wool and livestock sales, at present, the financial impact cannot be reasonably estimated, and supply chains were operating with minimal disruptions.

Livestock supply chains continue to operate without major disruption from COVID-19 with digital solutions in place to facilitate transactions alternatively to in-person methods. Cattle and sheep prices are forecast to remain high, Elders added in its outlook announcement.

Wool export to China is operationally sound, however the impact of reduced end-market demand in Europe and North America would likely continue to place downward pressure on price and volume.

Elders’ share price was up 8.6 per cent to $10.23 in early trading.