Shares in agribusiness giant, Elders jumped more than 6% yesterday after its 2018-19 annual results showed it had defied the impact of the drought.
The company told the ASX that it earned an underlying net profit of $63.6 million, at the upper end of its guidance in the year to September 30.
And underlying EBIT (earnings before interest and tax) was $73.7 million, in line with its guidance of between $72 million and $75 million.
Statutory profit after tax of $68.9 million compared to $71.6 million in the previous year.
Total sales revenue for the year rose 4% to $1.67 billion.
The shares were up 4.8% at $8.35 at the close.
Despite the impact of the drought, Elders said it benefitted from its diversified base which includes financial services and real estate operations.
The company also benefitted from strong wool prices and beef prices – the latter driven this year by the surge in sales to China as pork prices jumped sharply because of the impact of African swine fever on supplies of the metal.
Looking to 2019-20 Elders reckons it can boost earnings even further thanks to the acquisition of Australian Independent Rural Retailers.
Although the summer crop outlook remains difficult, average winter crop seasonal conditions will provide a solid platform for the business, the company said yesterday.
“In July this year, we announced the acquisition of Australian Independent Rural Retailers (AIRR) with completion scheduled for 13 November 2019,” CEO Mark Allison said yesterday.
“AIRR is an excellent strategic fit, providing Elders with additional growth channels through entry into the wholesale rural services market and the produce and hobby farmer services market.”
“The AIRR acquisition has the potential to add 20-25% growth to Elders at the EBIT level on a full-year basis.”
The final dividend is 9 cents a share fully franked making a steady 18 cents for the full year.