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Elders Posts $38.3m Profit for FY15 in “Profound” Turnaround

Elders Posts $38.3m Profit for FY15 in “Profound” Turnaround
Nov 16, 2015 By Simon Herrmann Tags: ELD

Leading Australian agricultural business Elders Limited (ASX:ELD) released its FY15 full year results and announced net profit after tax of $38.3m, up $35.3m compared to last year.

Underlying profit after tax was $32.6m which was a $23.5m improvement compared to the previous corresponding period (pcp). Underlying EBIT rose $18.2m to $45.8m. The improved financial performance has resulted in a rising share price over the past few years which enabled ELD to be included in the S&P ASX 300 index once again.

Elders continues to focus on executing its “Eight Point Plan” initiatives with the aim to “building a high safety and operational performance culture within the business”. Elders Chief Executive Officer Mark Allison said that it is “evident” in the results. Return on capital was 21.9%, a significant improvement from the 13.6% last year.

Mark Allison commented on the results: “Elders is rising to the challenge of new priorities, new expectations and a new level of performance resulting in another year of incremental improvement.”

Efficiency improved and costs were reduces as Mr Allison states that “net underlying finance costs reduced by $5.7m on last year with lower average net debt in 2015.” Operating cash flow was $5.3m which reflected the strong operating EBITDA cash flow. Elders also focused on simplifying its capital structure and therefore acquired 25% of its Elders Hybrids for $30m.

Overall the FY15 announcement is upbeat as management expects momentum to continue into 2016 and Elders continues to aim to return to sustainable growth in the years ahead. After a “near death” experience three years ago which saw its share price plummet below 60c in early 2013, Elders has achieved an impressive turnaround which the company calls “profound”.

ELD has gained ~86% year-to-date and is up 133% over the past 12 months.

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Simon Herrmann Author: Simon Herrmann Nov 16, 2015

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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