Elders shares result: The good, the not so good and the interesting, according to Macquarie

It was a mixed half for the agribusiness company. Here's Macquarie's take.

| More on:
A farmer looks backwards towards his crops.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Created with Highcharts 11.4.3Elders PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

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.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Happy couple doing online shopping.
Consumer Staples & Discretionary Shares

The best ASX retail shares to buy in FY26

Bell Potter thinks these shares could be top additions to an investment portfolio in the new financial year.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Consumer Staples & Discretionary Shares

Woolworths shares slip amid $100 million cost closure news

Woolworths announced a closure that’s expected to cost the supermarket giant some $100 million.

Read more »

A happy young woman in a red t-shirt hold up two delicious burritos.
Opinions

Bull vs. Bear: Guzman Y Gomez shares

Guzman Y Gomez shares peaked at $45.99 in February and closed at $28.04 yesterday. Where to now?

Read more »

Woman customer and grocery shopping cart in supermarket store, retail outlet or mall shop. Female shopper pushing trolley in shelf aisle to buy discount groceries, sale goods and brand offers.
Consumer Staples & Discretionary Shares

With a projected 7% dividend yield in FY29, is the Coles share price a buy?

Should this supermarket stock go in the shopping basket for passive income?

Read more »

kid with headphones using an electronic device with man looking at it
Consumer Staples & Discretionary Shares

Kogan shares just hit a 52-week low – is it time to buy?

Bargain hunters might want to monitor this ASX 300 company

Read more »

Young fruit picker clipping bunch of grapes in vineyard.
Broker Notes

How much upside does Macquarie see for Treasury Wine shares?

Macquarie has a neutral view on Treasury Wine shares, with an $8.50 price target and 11% upside.

Read more »

A man stands with his arms folded in front of banks of unused poker machines in a darkened gaming room.
Share Market News

Broker tipping 50% upside for this consumer discretionary company

This ASX 200 company could be set for a rebound

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Consumer Staples & Discretionary Shares

Is Treasury Wine ripe for a turnaround?

With China’s door once again open for Australian wine importers, Treasury Wine’s fortunes are improving.

Read more »