Elders FY24 result a 'mixed bag': Citi
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More news: Citi analysts called Elders' full-year result a "mixed bag", with revenue and gross profit coming ahead of market expectations, but underlying EBIT missing average forecasts.
Elders' outlook statement was also mixed, the analysts said, noting the potential for both tailwinds and headwinds in FY25.
On Elders' $475 million acquisition of Delta Agribusiness, announced this morning, Citi analysts said they would like to understand whether Delta's annualised contribution would be in addition to Elders' current EBIT target of $170 million, or a key driver towards that mark.
Elders launches capital raise for Delta Agri acquisition
More news: Elders has agreed to buy Australian agriculture company Delta Agribusiness for $475 million.
The acquisition will be funded through a $246 million accelerated entitlement offer, combined with a $110 million new revolving loan facility and a $190 million scrip consideration to Delta shareholders at $8.52 per share. Following the issuing of new Elders shares, Delta shareholders will own around 10.5% of Elders shares on issue.
Delta, which provides rural products and advisory services, generated revenue of $835 million and EBITDA of $53 million in the 12 months to 30 June, 2024.
Elders said the acquisition will strengthen its existing offering, particularly in rural products and digital and technical services. The combination of the two companies has the potential to general annual net EBITDA synergies of around $12 million over three years after completion of the deal, it said.
The acquisition is expected to be finalised in the first half of the 2025 calendar year, subject to regulatory and other customary completion conditions.
Elders looks to acquire Delta Agribusiness for $475m
More news: Elders has entered a trading halt on the ASX ahead of an announcement about a proposed acquisition of Delta Agribusiness and an associated capital raising via an accelerated entitlement offer.
Elders said it entered a binding share agreement to acquire Delta Agri today for $475 million that would be funded through an equity raise.
Delta Ag is an Australian agribusiness providing rural products and advisory services through a network of 68 locations.
The acquisition is subject to clearance by the competition regulator and customary conditions.
Elders noted the financial effects were not recognised at 30 September as it had not completed the acquisition accounting.
What they said: "In particular, it is not yet possible to provide detailed information for the fair value of the assets and liabilities acquired. The operating results and assets and liabilities of the acquired company are to be consolidated on completion of the acquisition," Elders said in its annual report.
Elders posts 55% profit drop, cuts dividend
The news: Agriculture and real estate group Elders reported a slide in full-year profit and slashed its dividend after improving trading conditions in the second-half of the year failed to reverse first-quarter headwinds.
The numbers: Elders reported statutory profit after tax of $45.1 million, down 55% from FY23, with sales revenue dropping 6% to $3.13 billion. Its underlying EBIT fell 25% to $128 million.
The board declared total dividends of 36 cents per share, 60% franked, down from 46 cents per share, 30% franked, in FY23.
The context: Elders said that improvements in second-half trading were unable to reverse negative impacts in the first quarter, driven by low livestock prices, lower crop protection margin and subdued client sentiment.
The group's product, channel and geographical diversification helped it partially overcome market headwinds, the company said, while it continues to invest in transformational projects to support earnings growth and operational efficiency.
Elders said it is optimistic about the 2024 summer crop and expects a gradual margin improvement in its rural product business following "significant volatility" in crop protection prices in FY23.
In its real estate business, the company expects continued improvement in market conditions to support increasing gross margin, though interest rate pressures remain a headwind for regional residential property demand.
The sources: ASX announcement, ASX announcement, ASX announcement, ASX announcement, Citi research
