Elders (ELD) H2 2024 earnings summary

Executive summary

• FY24 marked the first year of the fourth Eight Point Plan, with a challenging Q1 but resilient performance overall, supported by diversification, disciplined cost management, and improved second half trading.

• Underlying EBIT for FY24 was AUD 128 million, just below the midpoint of guidance, with strong cash conversion and a maintained dividend of AUD 0.18 per share (70% franked).

• The business continued to focus on safety, sustainability, and transformation initiatives, including the successful launch of the SysMod project and a reduction in lost time injuries.

• A major acquisition of Delta Agribiz for AUD 475 million was announced, expected to be EPS accretive pre- and post-synergies, and to enhance technical capabilities and geographic reach.

• Maintained position as Australia's most trusted agribusiness brand for the fifth consecutive year.

Financial highlights

• Sales revenue declined 6% year-over-year to AUD 3,131.3 million, but gross margin increased by AUD 18.6 million to AUD 637.6 million, up 3% year-over-year, driven by acquisitions and new business.

• Underlying EBIT declined by AUD 42.8 million to AUD 128 million (down 25%), mainly due to Q1 challenges; underlying NPAT dropped 38% to AUD 64 million.

• Dividend payout ratio is currently above policy but considered maintainable as Q1 conditions have normalized; total dividends per share for FY24 were 46.0 cents (30% franked), down 22% from FY23.

• Operating cash inflow was AUD 82.9 million, with favorable cash conversion expected in FY25.

• Net debt increased by AUD 177 million to AUD 437 million, with leverage ratio at 2.4x–3.1x, expected to normalize with improved conditions.

Outlook and guidance

• Targeting 5%-10% growth in EBIT and EPS through the cycles, with a minimum 15% return on capital.

• FY25 outlook assumes average seasonal conditions, with positive momentum from Q4 FY24 and optimism for the 2024 summer crop.

• Management expects leverage to return to target range (approx. two times) by H1 FY25, supported by debtor collections and lower transformational capex.

• No formal annual guidance provided, but consensus expectations for FY25 EBIT (~AUD 170 million) are seen as reasonable if average conditions persist.

• Margin stability anticipated in rural products, with livestock prices and volumes forecast to remain strong.