This article first appeared on GuruFocus .
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EBIT:Up 33% year-over-year to $76.6 million.
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Sales Revenue:Increased by $426.4 million, up 32%.
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Gross Margin:Increased by $83.1 million to $396.6 million, up 27%.
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Operating Cash Flow:Positive $67 million with cash conversion of 176.6%.
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Delta Agribusiness Contribution:Added $45.8 million to gross margin in the first five months.
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Dividends:Offering of $0.18 per share.
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Net Debt:Normalized core debt at $210 million post-Killara sale.
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Leverage:Normalized leverage at 2.6 times, with a target range of 1.5 to 2 times by FY26.
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Return on Capital:Approximately 12%, down 0.3% from FY25 when normalized.
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Release Date: May 18, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Elders Ltd ( ASX:ELD ) reported a 33% increase in EBIT, showcasing strong financial performance.
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The company demonstrated solid operational resilience despite mixed seasonal conditions, supported by a diversified portfolio.
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Successful integration of Delta Agribusiness is on track, with synergy targets expected to be realized in the second half of FY26.
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Elders Ltd ( ASX:ELD ) maintained strong cash conversion and positive progress on leverage and return on capital.
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The outlook for Australian agriculture remains positive, with strong international demand for livestock and a favorable commodity backdrop.
Negative Points
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Supply chain disruptions in fertilizer, fuel, and crop protection due to geopolitical conflicts posed challenges.
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Increased competition in the retail business, particularly in crop protection, has led to margin pressures.
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Corporate overheads increased significantly, raising concerns about cost management.
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Livestock volumes, particularly in cattle and sheep, showed signs of market share loss.
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The ongoing SysMod project has resulted in higher transformation costs, impacting short-term financials.
Q & A Highlights
Q: Can you provide insights on the outlook for fertilizer sales in the second half, considering current availability and delivery risks? A: Elders sells fertilizer predominantly back-to-back, minimizing inventory risk. The outlook is uncertain due to affordability concerns, although the application window for winter crops is long. Financially, tonnage may remain flat or decrease, with revenue potentially increasing and gross margin staying flat, but margin percentage may decline. - Paul Rossiter, CFO
Q: How are you managing crop protection inventory decisions for 2027 amid rising upstream input costs? A: We aim to hold inventory for the shortest time possible. Recent price increases support current inventory positions. Supply chain issues from China are manageable, with potential cost increases in packaging and solvents due to geopolitical tensions. We remain nimble to adjust to potential price reductions. - Paul Rossiter, CFO and Mark Allison, CEO
Q: Will IT expenses remain high into 2027, and what is the timeline for cost reductions? A: IT expenses will see relief as projects complete. The first step is consolidating AIRR's systems by June 30, with full transition off the AS400 by early 2027. This will reduce complexity and costs associated with running dual systems. - Paul Rossiter, CFO
Q: Can you explain the significant increase in transformation costs and their duration? A: The $13.5 million transformation cost is due to multiple ongoing SysMod project waves. Costs will decrease as deliverables are completed, with four major components finishing in the next quarter. - Paul Rossiter, CFO
Q: How is the morale within Elders amid leadership changes and ongoing projects? A: Morale is positive, with a focus on growth and efficiency post-transformation. Each division is well-managed, and the transition to a new CEO is being handled smoothly. The team is optimistic about completing transformational projects and capitalizing on market opportunities. - Mark Allison, CEO and Paul Rossiter, CFO
Q: What is the impact of increased competition in retail due to dry conditions? A: Increased competition, particularly in crop protection, is noted, with margin pressures in certain regions. This may be a market reset as more products come off patent, affecting pricing dynamics. - Mark Allison, CEO
Q: Can you provide an update on Delta Agribusiness synergies and backward integration progress? A: Delta's backward integration is progressing well, with significant synergies expected in the second half, primarily from crop protection. The integration is ahead of the initial three-year plan. - Mark Allison, CEO
Q: How are you addressing concerns about corporate overheads and cost management? A: Corporate costs have increased due to transformation projects, but base cost growth is 4.7%. The focus is on completing projects quickly to realize benefits and reduce costs. - Paul Rossiter, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
