Elders Ltd (ASX: ELD) was one of the biggest movers on the local market in Monday morning’s trade, with shares up 6% to $8.60 after the agribusiness company released a positive FY18 interim result. Here are the key financial metrics, compared to the first half of FY17: Underlying profit after tax up 13% to $40 million Underlying EBIT up 10% to $46 million Operating cash inflow of $26 million, up from a cash outflow of $5 million. The main contributor to the strong performance was the retail business, thanks to higher product margins and the acquisition of New South Wales…
To keep reading, enter your email address or login below.
Elders Ltd (ASX: ELD) was one of the biggest movers on the local market in Monday morning’s trade, with shares up 6% to $8.60 after the agribusiness company released a positive FY18 interim result.
Here are the key financial metrics, compared to the first half of FY17:
- Underlying profit after tax up 13% to $40 million
- Underlying EBIT up 10% to $46 million
- Operating cash inflow of $26 million, up from a cash outflow of $5 million.
The main contributor to the strong performance was the retail business, thanks to higher product margins and the acquisition of New South Wales horticulture supplier Ace Ohlsson.
The combination of organic and acquisitive growth, together with cost control, are the pillars of the company’s second eight point plan, aiming at a balanced increase in earnings through to FY20.
The first three-year eight-point plan was the backbone of Elders’ impressive turnaround: the price of the stock increased 1,200% since the plan was launched in July 2014.
For the second half of FY2018, the company expects challenging conditions, with a decline in livestock prices and dry weather curbing demand for cropping inputs.
However, retail earnings are poised to increase following the recent acquisition of agricultural chemical company Titan Ag Pty Ltd, expected to generate around $7 million additional EBIT in the first year of ownership. Elders’ financial services segment is also expected to grow, thanks to continued momentum in the company’s banking and livestock funding products.
Elders will resume interim distributions, paying a fully franked dividend of 9 cents per share to shareholders of record as of May 22.
I would recommend Elders to those interested in an investment in agribusiness. Unlike Nufarm Limited (ASX: NUF) and Graincorp Ltd (ASX: GNC), Elders seems only marginally affected by the dry season that is plaguing Australian crops.
While industry peer Australian Agricultural Company Ltd (ASX: AAC) struggles to find an effective growth strategy, Elders’ management appears to know exactly how to improve shareholder returns, as demonstrated by the price run of the stock in the past few years.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.