Elders: Singing In The Rain

Australia | Nov 17 2021

A solid results beat from Elders had a lot to do with favourable weather conditions, but brokers agree the company’s positive outlook is not solely weather-dependent

-Elders FY21 solidly beats consensus
-Seasonal conditions the primary driver
-Offering several other growth drivers beyond favourable seasons

By Greg Peel

It is a truth universally acknowledged that if one invests in an agricultural company one is placing oneself in the hands of the weather gods. For Elders ((ELD)), it’s been a case of famine to feast on an earnings basis as three years of devastating drought have given way to two years of quite the opposite.

From 2017-19 drought to 2020-21 above-average rainfall, Elders share price has recovered by 200%.

Yet while crop harvests and livestock prices will always be significant drivers of Elders’ performance, the company is executing on its plans to drive longer term earnings through other means than looking nervously out the window, and brokers see this as a distinguishing factor.

All things to all farmers

There is very little, if anything, Elders cannot offer farmers of crops or livestock. From seeds, fertilisers and animal health products, to farming advice, livestock and wool sales agency, to rural real estate agency and property management, to rural loan broking, banking and insurance, and all the way to meat processing and distribution, Elders is a farmer’s one-stop shop.

And that all-encompassing diversity is only set to grow.

Elders’ FY21 results materially beat consensus forecasts. Solid earnings growth was supported by both revenue and margin growth, and driven both organically and through no less than nine bolt-on acquisitions in the period.

No less? Elders is eyeing off 27 more potential bolt-ons.


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