Elders Limited

Reported hard numbers: underlying EBIT of $76.6 million, up 33% year on year; gross margin of $396.6 million, up $83.1 million or 27%; operating cash inflow of $67 million; cash conversion of 176.6%; operating costs up $12 million or 4.7% on an adjusted basis; normalized return on capital approximately 12%, down 0.3% from FY '25; working capital up $147 million; post-Killara normalized net debt of $425.8 million; normalized core debt of $210 million; normalized leverage of 2.6x; third-party lending limits above $75 million with $35 million drawn. Management reiterated the $8 million Delta fast-track synergy target is on track, with the majority due in the second half, and said return to the 1.5x to 2x leverage target range is forecast in FY '26. No explicit EPS figure was stated in the transcript; a dividend of $0.18 per share was mentioned.

Mark Allison framed the half as resilient and strategically on track, saying Elders is benefiting from diversification across geography, products, and services despite mixed seasonal conditions and geopolitical supply disruptions. He emphasized that the business is nearing the end of the Fourth Eight Point Plan, with major transformation projects largely completed on time and benefits expected to flow through from here. His tone was optimistic, repeatedly pointing to an improved agricultural backdrop, stronger livestock markets, and a platform for growth from Delta and the divisional model.

Paul Rossiter highlighted the main financial drivers: underlying EBIT of $76.6 million, gross margin of $396.6 million, operating cash inflow of $67 million, and normalized leverage of 2.6x after adjusting for Killara completion. He explained that the $13.5 million transformation cost was largely SysMod-related, reflecting overlapping waves, go-lives, and added resources, and said some relief should start in the next quarter with more meaningful improvement in 2027. He also noted working capital will likely ease in the second half, third-party lending is progressing, and tax payments for Elders Limited are expected to recommence from June 2026.

Analysts pressed management on fertilizer demand, crop protection inventory, rising corporate overheads, and whether cost growth is temporary or recurring. Management said fertilizer is largely back-to-back, so inventory risk is limited, but demand is uncertain because affordability may curb application rates; crop protection inventory is managed tightly, with supply chain pressures more likely to show up in packaging and input costs than in active ingredient availability. On costs, Paul attributed the step-up mainly to SysMod and said benefits are incremental and weighted to the second half, while Mark and Paul acknowledged the project has created a temporary overhang that should ease as waves complete.