Elders Ltd (ASX: ELD) shares are drawing attention after the company posted a mixed half-year update earlier this week.
The agribusiness company's stock has had a difficult year in 2025, down 13% at the time of writing, with a 6% slump in the past week alone.
Elders shares fetch $6.22 apiece, down from highs of over $7.50 observed in February.
Analysts at Macquarie posted their take on Elders' half-year numbers in a note to clients this week, covering "the good", the "not so good", and the "interesting" in their update. Let's dive in.
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Elders shares slump on half-year numbers
Elders reported a decent set of earnings for the first half, with sales up 5% to $1.4 billion, and pre-tax earnings growing by two-thirds over the year.
This comes after a dry first quarter last year, and a rebound in the livestock Agency segment, where gross margins surged to 37%.
Top broker Macquarie laid out its thoughts in the note to clients this week, highlighting these gross margins as a strong point, along with the fact that "livestock outlook and fundamentals remain sound".
It also commented on Elders' wholesale network, which produced $14 million in pre-tax earnings for the period.
But Elders shares were heavily sold after the earnings update, having missed expectations from several firms. The "not so good" from Macquarie's note included these takeouts:
Sales of $1.41 billion below our $1.57 billion estimate. EBITDA of $96 million below our $116 million. Underlying EBIT of $64 million (+67% vs pcp) below our $78 million and Visible Alpha consensus of $73 million…
…Operating cash flow of $31 million below our $50 million and vs pcp of $49 million with working capital build of $48.5 million incl receivables +$36 million, inventories/ livestock +$109 million and payables + $96 million. Delayed season in drier regions saw larger WC increase vs our estimates.
So despite the growth, it was behind what the market was expecting. This saw investors flee from Elders shares this week.
Macquarie also trimmed its FY25 profit forecast by 18%, reflecting the weaker pricing and volumes in the AgChem segment.
It made further a 14% reduction in earnings through to FY29.
I'd note that research restrictions currently prevent Macquarie from providing a valuation on Elders shares.
What else was said?
One "interesting" takeout from Macquarie's view on Elders shares was that management provided no "quantitative guidance" in the earnings result.
It also said the company is projecting an "average" winter crop this year, even with dry conditions in South Australia and Victoria.
"Elders' geographical presence and favourable conditions across many other parts of the country partially mitigates this", the broker said.
On the dividend front, Elders declared an 18 cents per share payout, maintaining an 84% payout ratio. This is above its usual 40-60% target, but management expressed comfort with this higher distribution level in the short term. No saying what this means for Elders shares moving forward.
Foolish Takeaway
Elders shares delivered a mixed first half, with strengths and weaknesses observed throughout the company's numbers.
Macquarie hasn't provided a rating, but I'd note that the list of "good" and "not so good" comments in its latest note on the company was fairly balanced.
Meanwhile, Bell Potter retained its buy rating on Elders shares after the result, valuing the stock at $9.10 apiece.
