Elders profits fall in tough agriculture market, shares soar

The news: Australian agribusiness Elders has overcome tough market conditions to post its second-best earnings before interest and tax result for the decade.

The numbers: Elders recorded a net profit after tax of $100.8 million, down 38% from a bumper year in FY22. Earnings before interest and tax were down 26% to $170.8 million, but still the second best result for the decade. Total dividends for the year were 46 cents per share, 30% franked and down 10 cents from last year. Net operating cash flow was $169.2 million, resulting in a cash conversion of 163%, blowing its 90% capital management target out of the water. ELS shares were up almost 15% at $7.08 at around 11.30am AEDT.

The context: Elders' results illustrated a shift in the agricultural markets, where record livestock prices and high rainfall in FY2022 gave way to tougher conditions this year. Summer crop production is expected to decline as drier El Nino conditions take their toll. On a positive note, fertiliser and crop production costs have eased after supply shortages in recent years. Real estate conditions are expected to remain subdued as high interest rates contain broadacre sales.

What they said: "The year was met with challenging market and cost conditions and despite this, Elders achieved its second highest EBIT result in the last 10 years," Elders chief executive Mark Allison said in a statement.