Why is the Elders share price leaping 15% on Monday?

ASX 200 investors are sending the Elders share price soaring today.

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The Elders Ltd (ASX: ELD) share price is off to the races on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) agribusiness closed Friday trading for $6.18. At the time of writing, Elders shares are swapping hands for $7.08 apiece, up 14.56%.

For some context, the ASX 200 is down 0.1% at this same time.

Today's share price hike follows the release of Elders' full-year results for the 12 months ending 30 September 2023 (FY 2023).

Read on for the highlights.

Elders share price gains on resilient earnings

  • Sales revenue of $3.32 billion, down 4% year on year
  • Underlying earnings before interest and taxes (EBIT) of $171 million, down 26% from FY 2022
  • Statutory net profit after tax (NPAT) of $101 million, down 38% year on year
  • Final dividend of 23 cents per share declared, 30% franked

What else happened during the year?

While many of the financial metrics came in below FY 2022 levels, ASX 200 investors are bidding up the Elders share price after the company exceeded some core measures.

These came despite what the company described as "adverse market headwinds". Those included "softening input prices for key agricultural chemicals and fertilisers, significantly declining livestock prices, as well as inflationary pressures and rising interest rates".

Underlying return on capital (ROC), for example, came in at 16%. This exceeds management's target benchmark of 15% in Elders' Eight Point Plan.

And operating cash flow was a net inflow of $169 million. This resulted in a cash conversion of 163%, which also exceeds the target benchmark of 90% detailed in the company's capital management framework.

And with the final 23 cent per share dividend, the full-year dividend payout comes to 46 cents per share. At the current Elders share price, that equates to a yield (part trailing, part pending) of 6.6%, likely attracting the attention of ASX 200 income investors today.

What did management say?

Commenting on the full-year results sending the Elders share price soaring today, CEO Mark Allison said:

The year was met with challenging market and cost conditions and despite this, Elders achieved its second highest EBIT result in the last 10 years.

This resilience was achieved due to our geographically diversified multi-product portfolio, which generated strong average earnings across the group.

What's next?

Looking at what could impact the Elders share price in the year ahead, Allison said that over the medium-term, the company will "continue to operate and grow according to its guiding strategy, the Eight Point Plan, which aligns our workforce with our goals and ensures we are investing in the right people and initiatives".

He noted that Elders expects some of the FY 2023 market headwinds to keep blowing into FY 2024. "But we are well placed to pursue opportunities for further growth and diversification," he added.

Elders share price snapshot

Despite today's big boost, the Elders share price remains down 32% over 12 months.

Motley Fool contributor Bernd Struben 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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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