Elders shares dive as first-half trading falters
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The news: Shares in Elders tumbled 25% on the ASX after the agriculture and real estate group said first half trading was "significantly below" expectations, impacted by El Niño, low farmgate prices and sustained margin pressures.
The numbers: Elders expects underlying EBIT of between $120 million and $140 million for the 2024 financial year. The group's FY23 underlying EBIT was $170.8 million, a 26% drop compared to the previous year.
The company's target cash conversion of greater than 90% of underlying net profit after tax is forecast to be achieved by 30 September.
Elders shares were trading 25% lower at $7.38 by 11:40am AEDT.
The context: Elders said that first-half trading was hit by subdued client sentiment following an El Niño declaration by the Bureau of Meteorology. The agribusiness also felt the impacts of lower crop protection prices compared to the prior corresponding period, which weighed on sales revenue and margin.
Meanwhile, conditions were compounded by lower cattle and sheep prices, margin pressure in some agricultural chemical products, and subdued trading in March due to a later start to winer crop in Western Australia.
However, Elders said the outlook for the FY24 winter crop in most regions has improved.
Elders shares climbed on Friday after Macquarie analysts upgraded their rating for the Adelaide-based company from "neutral" to "outperform", and lifted its target price from $7.12 to $10.45.
The source: ASX announcement
