The Elders Ltd (ASX: ELD) share price is starting the week deep in the red.
In morning trade, the ASX 200 agribusiness company's shares are down 8% to $6.07.
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Why is this ASX 200 share crashing?
Investors have been hitting the sell button on Monday in response to the release of the company's half year results.
For the six months ended 31 March, Elders reported a 5% increase in sales revenue to $1,413.1 million.
Things were even better for its underlying earnings before interest and tax (EBIT), which came in 67% higher than the prior corresponding period at $64.3 million.
Also rising strongly was its underlying profit after tax, which jumped 166% to $38.2 million.
The ASX 200 share advised that its performance recovered from a challenging prior corresponding period with most products and services achieving an uplift year on year.
It notes that higher livestock prices were a key driver, improving sentiment and production margins in the livestock industry. In addition, key acquisitions in Real Estate Services and strict cost management supported improved earnings.
This was despite gross margin decline from Retail Products due to ongoing dry conditions across parts of the country, which it warned has the potential to push demand for some winter crop inputs to the second half.
In light of its strong profit growth, the ASX 200 share has more than doubled its interim dividend to a 50% franked 21.4 cents per share from 9.1 cents per share a year ago.
Why the selling?
Given how strong Elders' result looks on paper, investors may be wondering why its shares are being sold off today.
Well, the reason for that is this earnings result was still short of expectations despite increasing strongly year on year.
For example, Citi was expecting the company to post EBIT of $75 million. This was a touch ahead of the consensus estimate of $73 million.
Elders' underlying EBIT came in at just $64.3 million for the six months.
Management commentary
The ASX 200 share's CEO, Mark Allison, said:
Elders has made steady progress on its financial and operational goals in the first half of FY25, reporting a 67% increase in underlying EBIT from the same time last year. Performance was impacted by prolonged dry conditions in some key cropping regions, causing lower rural products sales, but balanced by high demand and prices for livestock, which drove a significant improvement from the prior corresponding period and a strong first half overall.
Livestock prices and demand are expected to remain strong, and a return to average seasonal conditions for the 2025 winter crop is forecast. These are all positive indicators for our business going into the second half.
Outlook
No firm guidance was given for the full year. However, management notes that an average winter crop is forecast, despite a late start to sowing in parts of the country, which is partially mitigated by its extensive geographical presence.
It also points out that the outlook and fundamentals for Australian livestock remain sound with little impact anticipated from currently proposed tariffs. There is also potential for cattle and sheep saleyard prices to rise in the second half.
