Elders (ELD) H2 2024 Retail Investor Briefing earnings summary

Executive summary

• FY24 results demonstrated resilience after a challenging first quarter, with a strong recovery in the second half and positive client sentiment as seasonal conditions normalized.

• Strategic focus included cost and capital efficiency, network expansion, 13 bolt-on acquisitions, and ongoing systems modernization.

• Maintained position as Australia's most trusted agribusiness brand for the fifth consecutive year, with strong employee engagement and sustainability progress.

• The acquisition of Delta Ag aligns with growth strategy, adding geographic reach, regulatory assets, and technical expertise.

Financial highlights

• FY24 EBIT reached AUD 128 million, within guidance of AUD 120–140 million, while underlying EBIT fell 25% and underlying NPAT dropped 38% year-over-year.

• Sales revenue declined 6% to $3,131.3m, but gross margin rose 3% to $637.6m, with margin percentage up to 20.4%.

• Return on capital declined to 11.3%, below the 15% hurdle rate, mainly due to a weak first quarter and upfront transformation costs.

• Net debt increased 68% to $436.8m, with leverage ratio at 2.4x–3.1x, above target due to acquisitions and delayed debtor collections.

• Cash conversion was 129%, down from 163% in FY23, impacted by higher debtors at balance date.

Outlook and guidance

• FY25 is expected to benefit from normalized first quarter performance, average seasonal conditions, and improved client sentiment.

• Transformation projects (Elders Wool, Killara Feedlot, SysMod) are expected to deliver earnings benefits in FY25 and FY26.

• Leverage ratio forecast to return to target range (1.5x–2.0x) in FY25 H1, supported by debtor collections and reduced transformational capex.

• Bolt-on acquisition activity will be reduced in FY25 after a strong FY24.

• Market outlook anticipates stable farm input costs, strong livestock prices, and margin relief in real estate as interest rates stabilize.