Live export markets are likely to remain under pressure, but agribusiness Elders still expects its annual financial results to improve.
Elders on Monday booked a half-year net profit of $24.6 million - up 55 per cent on the profit of $15.9 million a year earlier.
Excluding one-off items worth $5.2 million - including a $4.7 million tax adjustment - underlying profit for the six months to March 31 rose to $19.4 million, from $16.2 million.
Chief executive Mark Allison said Elders' Australian operations - sales of farm inputs such as agricultural chemicals and fertiliser, and services selling sheep, cattle and farms - had performed well.
Elders' retail business lifted its underlying profit, driven by increased sales activity and recovery of cotton regions in northern Australia.
High cattle prices drove higher livestock earnings and demand for large cattle farms in the real estate business.
But Elders' live exports operations made a loss.
And earnings from feedlot processing operations fell because of the high price of cattle.
Elders said more competition was affecting margins in the live exports market.
Mr Allison said that as a result of weaker demand for dairy cattle in China, some ships had been diverted from the long-haul market to the short-haul market, which includes Vietnam and Indonesia.
"That means there is significantly more activity, particularly in Vietnam," Mr Allison said.
"There's a doubling up of shipping capacity driving cattle into that market.
"That in turn is driving competition and driving margins down."
Mr Allison said uncertain quota allocations, the high cost of cattle due to higher prices, and the rising Australian dollar had exacerbated the problem.
Elders did not expect the situation to improve much over the next few months so the group was looking to cut costs in its live exports business.
"Certainly, in the next few months, it's not going to get a lot better, particularly around cattle cost, and certainly we're not expecting those margins to miraculously rebound," Elders chief financial officer Richard Davey said.
Mr Allison said that despite the tough live export market, Elders was expanding its footprint in China - including supplying more Chinese cities with branded beef.
Elders said the outlook for the second half of the fiscal year was mixed.
"However, overall improvement on last year's result is expected," the company said.
The winter cropping outlook for northern and western Australia was positive, with average winter production expected in southern Australia.
Cattle and sheep prices are expected to remain strong due to tight supply and high demand.
High cattle prices would continue to put pressure on margins in the feedlot and processing operations, and live export.
Elders shares closed 30 cents or 7.8 per cent lower at $3.55.
ELDERS' FIRST-HALF RESULT
* Revenue up 16pct to $727.8m
* Profit up 55pct to $24.6m
* No interim dividend
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