The Elders Ltd (ASX: ELD) share price is under the spotlight after reporting its FY24 first-half result.
It works with primary producers to provide products, marketing options and specialist advice across rural, wholesale, agency and financial property and service categories. It also has a leading Australian rural and residential property agency and management network.
On top of that, Elders says its feed and processing operates a top-tier beef cattle feedlot in NSW.
FY24 first-half result
Here are the highlights for the six months to 31 March 2024:
- Revenue dropped 19% to $1.34 billion
- Underlying EBIT (EBIT explained) dropped 54% to $38.4 million
- Underlying net profit after tax (NPAT) fell 72% to $14.4 million
- Statutory NPAT sank 76% to $11.6 million
- Interim dividend declined 22% to $0.18 per share
The company explained its half-year performance was influenced by “challenging seasonal conditions, cautious client sentiment, softening crop input prices and lower livestock prices.”
However, Elders said trading in the second quarter improved compared to the first quarter after an uplift in client sentiment, supported by “un-forecast, widespread rainfall across many regions in eastern and southern Australia.”
Livestock prices recovered “strongly” throughout the half, in line with improved seasonal conditions, which have also “assisted the outlook for the 2024 winter crop” and Elders’ second half.
Refinanced debt
The agricultural business also announced it has agreed refinancing terms. The balance sheet strength can have an importance influence on the Elders share price, or indeed any business.
There has been an increase in the ‘multi-option facility’ from $180 million to $230 million, with an extension to May 2027.
Elders also said it has increased its receivables facility limit from $300 million to $350 million to accommodate recent growth of Elders’ retail products businesses and the associated receivables.
It also said it has simplified its debt structure.
The idea of these changes are to maximise the efficiency and flexibility of those facilities to support business strategy and growth.
Outlook for the Elders share price
Management are expecting better trading conditions during the second half of FY24, as client sentiment continues to improve after a return to average seasonal conditions. This improved sentiment is forecast to positively impact the outlook for the winter crop and livestock production.
Elders said it will continue to invest in strategic initiatives while maintaining a focus on cost and capital efficiency.
The company is expecting to make underlying EBIT of between $120 million to $140 million in FY24.
With the Elders share price down 40% from April 2022, it could be an opportunistic time to invest. If it fell further because of dry weather, that could be a cyclical deep value opportunity.
