Elders Limited (ASX: ELD) – Unfavorable conditions impacting the stock

Elders Limited (ASX: ELD) has announced that despite various factors across Australia, it remains on track to deliver consistent earnings in the September FY18 year. Market commentary with respect to current dry weather conditions and declining cattle prices has impacted the stock.

Current expectations are underlying earnings before interest and tax (EBIT) to be in the range of $70m to $74m (compared to FY17 underlying EBIT $71.0m). Underlying net profit after tax (NPAT) for the 12 months to 30 September 2018 is expected to be in the range of $59m to $63m (compared to FY17 NPAT of $58.4m).

With the third quarter to 30 June 2018 completing, retail earnings have been impacted by unseasonally dry conditions across many parts of Australia, which has reduced chemical input demand. Additionally, easing cattle prices have impacted Elders’ agency earnings, as previously foreshadowed. However, the dry conditions have allowed feedlot utilization to remain at high levels and sheep and wool prices and volumes have remained strong and consistent with the prior year. Footprint expansion continues to offer growth opportunities.

Mark Allison, Elders’ Chief Executive Officer and Managing Director, said that “the forecast results reflect the Company’s commitment to the strategic Eight Point Plan and the resolve to achieve continuous high quality growth, despite the difficult trading conditions. We believe Elders remains well placed to achieve our target of 5-10% EBIT growth through the agricultural cycle to 2020”.

ELD is currently trading at a market price of $7.165 with a daily change of -14.089%, as at July 06, 2018 (3 pm AEST) following a positive change of 65.59% over the past 12 months.


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