Elders share price jumps 9% on stellar first-half profit growth

Elders has started the week very strongly. Here’s why…

| More on:
Elders share price Farmer jumping for joy in field

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Elders' shares have stormed to a multi-year high on Monday
  • This follows the release of a first-half result that smashed expectations
  • Elders has also upgraded its FY 2022 profit guidance

The Elders Ltd (ASX: ELD) share price has come flying out of the gates on Monday morning.

In early trade, the agribusiness company’s shares jumped 9% to a multi-year high of $14.98.

Elders share price jumps amid strong first-half profit growth

  • Sales revenue up 38% to $1,514.8 million
  • Earnings before interest and tax (EBIT) up 80% to $132.8 million
  • Net profit after tax up 34% to $91.2 million
  • Interim dividend increased 40% to 28 cents per share

What happened during the first half?

For the six months ended 31 March, Elders reported a 38% increase in revenue to $1,514.8 million.

This was driven by growth across all product areas and geographies. The star of the show, though, was the Rural Products business, which reported a 47% jump in sales to $312.9 million. This reflects strong demand for fertiliser and crop protection products following favourable seasonal conditions across key cropping regions.

As for earnings, the company delivered an 80% jump in EBIT to $132.8 million and 34% increase in net profit after tax to $91.2 million. This was underpinned by its strong sales growth and the early success of its Eight Point Plan.

This strong profit growth allowed the Elders board to declare a 30% franked 28 cents per share interim dividend, which is up 40% year on year.

How does this compare to expectations?

As you might have guessed from the Elders share price performance today, this result outperformed expectations.

According to a note out of Goldman Sachs, its analysts were expecting Elders to report a 13% increase in sales revenue to $1,245.2 million and a 27% lift in EBIT to $93.7 million.

Elders has smashed both estimates with its sales revenue of $1,514.8 million and EBIT of $132.8 million.

Outlook

In light of the company’s performance during the first half and strong start to the second half, management has upgraded its earnings guidance for FY 2022.

Instead of underlying EBIT growth of 20% to 30%, it is now forecasting EBIT growth of 30% to 40% for the 12 months.

Managing Director and Chief Executive Officer, Mark Allison, said:

The strong first half performance has continued in April and we now expect to deliver full year 2022 Underlying EBIT in the range of 30% to 40% above full year 2021 Underlying EBIT. This expectation replaces the guidance we gave to the market on 14 March 2022.

Though, the company warned that its guidance could be impacted by potential supply chain disruptions as a result of COVID-19 and geopolitical events, unexpected changes to seasonal conditions and severe weather events, and unexpected changes in commodity prices.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

chicken, KFC, drumstick, fried food, junk food
Earnings Results

Collins Foods share price jumps 11% on FY22 results

This KFC restaurant operator had a strong year...

Read more »

Happy woman looking for groceries. as she watches the Coles share price and Woolworths share price on her phone
Consumer Staples & Discretionary Shares

Metcash share price storms 8% higher on FY 2022 earnings beat

Metcash had a strong 12 months...

Read more »

A young man with short black fuzzy hair and wearing a black and white striped t-shirt looks surprised at a broker's tip that Macquarie shares will rise by 30%
Earnings Results

Mesoblast share price spikes amid ‘substantial reduction in operational spend’

Mesoblast also completed the resubmission of its Biologics License Application (BLA) for remestemcel-L to the FDA last quarter.

Read more »

A doctor sits with a patient and uses a pen to point to certain parts of her mammogram scan
Earnings Results

Volpara share price up on record full-year results

ASX investors appear to be pleased with Volpara's results.

Read more »

Miner looking at his notes.
Earnings Results

Champion Iron share price falls on FY22 results

Champion Iron shares are under pressure on Thursday...

Read more »

Person with thumbs down and a red sad face poster covering the face.
Earnings Results

Here’s why the New Hope share price is tumbling 8% on Thursday

Coal prices have reached all-time highs amid Russia's war in Ukraine.

Read more »

a man sits at a bar leaning sadly on his basketball wearing a US flag sticker on his cheekbone near a half drunk beer and looking despondent as though his basketball team has just lost a game.
Earnings Results

Why is the Catapult share price tumbling 6% lower today?

Catapult shares are falling on Thursday following the release of its full-year results...

Read more »

Man with a sleep apnea mask on whilst sleeping.
Earnings Results

Fisher & Paykel share price exhales following ‘strong’ full-year results

The COVID-19 tailwind is beginning to taper off, but how did Fisher & Paykel perform in FY22?

Read more »