Search ASX code:
Generic filters

FY20 result: Elders (ASX:ELD) reveals big profit growth

Elders Ltd (ASX: ELD) has reported its FY20 result showing large growth of profit over the year. What will the Elders share price do?

Elders is an agribusiness that offers a variety of services for the agricultural sector. It provides access to products, marketing options and specialist technical advice across retail, agency (wool, livestock and grain), real estate and financial product (principally finance and insurance products) categories.

FY20 result from Elders

It reported that sales revenue grew by 29% to $2.09 billion.

Elders then reported a number of profit measures before the effects of the accounting changes related to AASB 16.

Underlying EBIT (EBIT explained) rose by 62% to $119.4 million and underlying profit after tax grew by 71% to $109 million. Underlying earnings per share (EPS) grew by 35% to 70.7 cents.

Elders said that the result was driven by gross profit margin improvement across all state geographies and products, combined with continued cost control and capital allocation discipline.

The statutory profit after tax (before AASB 16) grew by 80%. Including AASB 16, statutory net profit was $122.9 million.

Its operating cash flow dramatically improved, rising by 887% to $110.5 million.

Segment commentary

Elders said that the performance of its rural products division was a highlight. The acquisition and integration of leading rural supplies wholesaler AIRR added $44 million in wholesale gross margin, well in excess of acquisition business case projections. It sold more of its own branded products at higher margins.

Within the agency services, higher livestock prices provided a boost and more than offset the soft wool market. Its real estate business achieved strong growth in both broadacre and residential property turnover. Financial services delivered above acquisition case growth for the livestock in transit delivery warranty product.

Elders dividend

Elders’ total FY20 dividend declared by the board was 22 cents per share, up 22% compared to FY19.

Management comments

Elders CEO and Managing Director Mark Allison said: “Our solid business foundations and strict financial discipline, together with a commitment to ensuring the safety and prosperity of clients, communities and staff across Australia allowed us to succeed despite challenging operating conditions in FY20.”

Outlook

Elders said that the area planted to summer crop is expected to rebound from historically low levels last year, which should mean a recovery in demand for crop protection and fertiliser.

Cattle prices are expected to soften and wool prices are expected to remain low in the short term. Demand for farmland is expected to remain high.

Elders said that significant growth opportunities exist to gain market share by serving new customers in new geographies, with multiple product and service portfolios.

It’s a business that has done really well over the past year and past four or so years. However, as an agribusiness there’s likely to be a bit of cyclicality, so it may be best to wait for a period of disruption.

There are other ASX growth shares I’d rather buy first like Pushpay Holdings Ltd (ASX: PPH). If you want something related to food then I’ve got my eyes on A2 Milk Company Ltd (ASX: A2M) at this level. I think both of these businesses offer more consistent growth potential.

Afterpay, Zip Co, Sezzle…

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW or entering your email below.

Note: the report is 100% free.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Afterpay, Zip Co, Sezzle…

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW.

Note: the report is 100% free.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

Rask Media’s Ultimate BNPL Sector Report

Afterpay, Zip, Sezzle… is this the opportunity of a lifetime? Or is BNPL a ticking time bomb? This 7,500-word analyst report takes a deep dive into the BNPL sector and shines a spotlight on each of the major players in this booming market. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

As we emerge from COVID-19, some tech companies are growing faster than ever. Rask’s investment analysts have identified 3 growth stocks set to benefit. Big time.

Enter your email below to access this report for free, including the names, ticker codes and analysis.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.