Elders Ltd (ASX: ELD) shares aren't going anywhere this morning.
Shares in the S&P/ASX 200 Index (ASX: XJO) agribusiness closed Friday trading for $8.65. And that's right where they are at the time of writing on Monday.
That's because management requested a trading halt for the stock pending the release of an acquisition announcement and the outcome of the institutional component of the company's capital raising.
Those announcements have just been released. As has the ASX 200 stock's full-year FY 2024 results.
Let's have a look at those results first.
Elders shares could face pressure amid steep FY 2024 profit decline
Elders shares could come under some pressure when trading resumes after the company reported a 55% year-on-year drop in statutory profit after tax to $45 million in FY 2024.
At $3.13 billion, sales revenue held up better, though it still slipped 6% from the prior year.
In other core financial metrics, Elders reported $128.0 million in underlying earnings before interest and tax (EBIT), down by 25% from FY 2023.
And operating cash flow of $83 million was down 51%, while the full-year dividend payout of 40.7 cents per share, 60% franked, declined by 22% year on year. Today, management declared a final dividend of 18.0 cents per Elders share, 70% franked.
While the full-year results were well down, the company noted that improved second-half trading partly helped offset the negative earnings impact from the first quarter. First quarter results were hit by low livestock prices, lower crop protection margin and subdued client sentiment.
Commenting on the FY 2024 results, Elders CEO Mark Allison said:
This year we entered our fourth Eight Point Plan and refocused our attention on achieving growth while maintaining strict financial discipline.
We continued to grow by expanding our network, adding 21 points of presence, and investing in projects of strategic significance, like our Systems Modernisation project, and our new wool handling business.
What's next?
Looking at what could impact Elders shares in the year ahead, the company said it was optimistic about the 2024 summer crop and expected price stability in livestock markets.
In its real estate segment, Elders forecasts support for increasing its gross margin from full-year earnings from acquisitions and continued improvement in market conditions. The company cautioned that interest rate pressures remained a headwind for regional residential property demand.
"Investing in the right initiatives and our people is a key focus to drive sustainable growth at Elders and will remain a focus in FY 2025," Allison said.
Elders shares in focus amid $475 million acquisition
Perhaps the biggest news for Elders shares today is the company's agreement to acquire 100% of the shares in the private company, Delta Agribusiness.
The acquisition has an enterprise value of $475 million.
If you're not familiar with Delta, the company is an Australian agribusiness. It provides rural products and advisory services through a network of 68 locations and 40 independent wholesale customers.
Over the 12 months to 30 June, Delta reported revenue of $835 million and earnings before interest, taxes, depreciation and amortisation (EBITDA) of $53 million.
Elders will fund the acquisition through:
- A $246 million fully underwritten pro rata accelerated non-renounceable entitlement offer
- A $110 million new revolving loan facility
- $190 million of new Elders shares issued to Delta shareholders as scrip consideration at $8.52 per share
The company cited the potential for the Delta acquisition to generate net EBITDA synergies of $12 million a year before one-off implementation costs.
This will be realised over the next three years following completion of the transaction, which Elders expects to occur in the first half of calendar year 2025.
Commenting on the acquisition that could offer a long-term boost for Elders shares, Allison said:
The acquisition of Delta continues Elders' successful track record of growing our business through disciplined acquisitions.
Delta provides us with greater exposure to key local retail markets as well as a leading agronomy and farm advisory team to complement and extend our products and services range for rural and regional Australia.
Elders shares have gained 17.7% over 12 months, not including the two dividend payouts.
