Agriculture services provider Ruralco, which is part of the Soul Patts-Brickworks corporate group – lifted first-half profit 29% to $16.1 million in the six months to March 31, despite tough trading conditions in the live export business.
After Ruralco’s trading update Morgans reduces FY18 estimates for underlying net profit by -8.5%, to the mid point of guidance. The broker also takes a more conservative stance in regards to FY19 and FY20 assumptions.
Results were in line with recently downgraded guidance. Morgans believes FY16 will be a base for earnings and growth will resume in FY17 from internal business improvements, new acquisitions and a better season.
In far from perfect conditions, Ruralco has delivered a very strong result, the broker suggests. Cash flow, profitability and margins are far superior to Elders ((ELD)). RHL’s strong balance sheet means it can take advantage of opportunities while still delivering solid dividends, the broker notes.