Elders eyes earnings jump, live export end

Elders is expecting earnings to jump after announcing it will end live exports and focus on being more a middleman between cattle producers and exporters.

Australian cattle

Elders will stop live long-haul exports, and will sell its short-haul and air-freight businesses. (AAP)

Elders is expecting underlying earnings to jump as much as 24 per cent after it decided to stop exporting live animals.

The agribusiness has reviewed its live dairy and beef cattle shipments China, Indonesia, Vietnam and Malaysia.

Chief executive Mark Allison says long haul shipments to China aren't creating satisfactory returns on capital or margins.

"Poor margins and capital inefficiency in the long haul business warrant an immediate cessation of that business," Mr Allison said in a statement on Monday.

"While we continue to support our clients who participate in the live export industry, the export, logistics and shipping of live cattle to long haul destinations is no longer central to Elders strategy."

The review found short-haul sea shipments of live beef cattle to Indonesia, Vietnam and Malaysia remained profitable despite "extremely high Australian cattle prices" so company will continue that business while preparing to sell it.

Mr Allison said Elders would then focus on linking beef and dairy producer clients with live exporters and accumulating cattle for exporters.

The cost of the divestment and associated restructing would be about $6 million.

The company says it expects earnings before interest and taxes of $54 million to $57 million this year, up from $45.8 million last year.

Elders said that range reflected better than average retail activity due to seasonal conditions, strong livestock prices and solid progress on its "Eight Point Plan" restructuring objectives.

"Conversely, high cattle prices have impacted margins in the feed and processing businesses," the company added.

The company also said after the sale of its export businesses it would have $25 million in working capital to invest.

Elders shares had jumped 25 cents to $3.75, adding another $28.4 million in value to the company, by 1300 (AEST) on Monday.


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Source: AAP


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