Highlights

  • Elders reported a 33% increase in underlying EBIT during the first half of FY26 following the Delta Agribusiness Acquisition .
  • Delta Agribusiness contributed to Earnings growth while integration and synergy delivery continue.
  • Net Debt increased following the acquisition, with management targeting deleveraging during FY26.
  • Livestock markets remained supportive, while dry conditions continued to affect parts of Australia's cropping regions.

Elders Limited (ASX:ELD) delivered significantly higher first-half earnings following the completion of its largest acquisition in recent history. However, despite the stronger financial performance, investors remained focused on higher debt levels, integration risks and seasonal conditions affecting Australia's agricultural sector.

The company, which traces its history back more than 180 years, is now working to demonstrate that the Delta Agribusiness acquisition can generate long-term returns while reducing Leverage over coming reporting periods.

First-Half Results Reflect Acquisition Impact

Elders reports on a 30 September financial year, with its latest half-year results covering the six months ended 31 March 2026. The reporting period included approximately five months of financial contribution from Delta Agribusiness following completion of the acquisition.

Underlying sales Revenue increased 32% to $1.77 billion, while gross Margin rose 27% to $396.6 million.

Underlying earnings before interest and tax (EBIT) increased 33% to $76.6 million, while statutory net profit after tax rose 17% to $39.5 million.

Operating Cash Flow more than doubled, increasing 115% to $67.0 million.

Despite these improvements, several underlying metrics reflected the impact of the acquisition.

Gross margin as a percentage of revenue declined from 23.4% to 22.4%.

Underlying Earnings Per Share decreased 4% to 18.1 cents following the issue of new shares used to partially fund the acquisition.

Underlying return on Capital also declined from 12.6% to 10.7%.

Management also highlighted ongoing supply-chain challenges affecting fertiliser, crop protection products and fuel, together with higher diesel costs and increased retail competition in regions experiencing dry seasonal conditions.

Delta Agribusiness Expands National Footprint

The $475 million acquisition of Delta Agribusiness substantially expanded Elders' national rural services network.

Founded in 2006, Delta contributed approximately 68 retail locations together with around 40 independent wholesale customers, strengthening Elders' presence across New South Wales, north-west Victoria, South Australia and Western Australia.

The acquisition consideration comprised approximately $292 million in cash together with the issue of approximately 22.3 million new Elders shares.

The Australian Competition and Consumer Commission announced in October 2025 that it would not oppose the acquisition, subject to divestment undertakings involving six Delta stores in Western Australia.

The transaction completed on 4 November 2025.

Management indicated that integration has progressed ahead of schedule.

During its first five months under Elders ownership, Delta contributed $45.8 million in gross margin and $10.4 million in EBIT.

Most procurement synergies, particularly within crop protection purchasing, are expected to be realised during the second half of FY26 and beyond.

Balance Sheet Remains a Key Focus

Following completion of the acquisition, net debt increased to $621.6 million at 31 March 2026.

Leverage rose to approximately 3.8 times, exceeding management's long-term target range of 1.5 to 2.0 times, although remaining within banking covenant requirements.

To support deleveraging, Elders has agreed to sell the Killara Feedlot, with completion expected during the second half of FY26, subject to regulatory approvals.

Management has indicated that, after adjusting for the planned disposal, core debt would reduce to approximately $210 million and leverage to around 2.6 times, with the objective of returning to the target range by the end of FY26.

The company also expects seasonal Working Capital to unwind as the winter crop cycle progresses.

Alongside the acquisition, Elders continues investing in its Systems Modernisation program, which incurred $13.5 million of transformation costs during the half-year as implementation progressed.

FY25 Performance and Agricultural Conditions

For FY25, ended 30 September 2025, Elders reported underlying EBIT of $143.5 million on revenue of $3.20 billion.

Underlying net profit after tax totalled $86.0 million.

The company maintained its Interim Dividend at 18.0 cents per share, fully franked, with payment made on 25 June 2026.

Livestock operations continued to benefit from favourable market conditions.

Cattle prices increased by approximately 32% year-on-year, contributing an additional $11.2 million to agency services gross margin.

Broader livestock indicators also remained relatively supportive through mid-2026.

However, cropping conditions remained more challenging, particularly across southern Australia where dry weather continued to affect agricultural production and Demand for crop inputs such as fertiliser and agricultural chemicals.

Leadership Transition Ahead

Elders announced on 5 February 2026 that René Dedoncker would succeed Mark Allison as Chief Executive Officer from 1 October 2026.

Mr Dedoncker most recently served as Chief Executive Officer of Fonterra's Mainland Group and previously held senior leadership positions at Mars.

Mark Allison, who has led Elders since 2014, will remain with the company throughout the leadership transition.

Factors Supporting the Investment Case

Supporters of Elders highlight the company's expanded national rural services network following the Delta acquisition.

The Business now has greater geographic coverage across key agricultural regions while livestock market conditions continue to provide earnings support.

Management also expects procurement synergies and integration benefits to increase during the second half of FY26 and beyond.

The planned sale of the Killara Feedlot is expected to contribute towards reducing debt and improving leverage metrics.

Risks to Monitor

Several risks remain important for investors.

Higher leverage following the Delta acquisition increases sensitivity to seasonal conditions and operating performance.

Successful deleveraging depends upon completion of the Killara Feedlot sale together with the anticipated release of seasonal working capital.

Dry seasonal conditions across cropping regions may continue to affect demand for agricultural inputs.

Future livestock price movements also remain an important earnings driver, while the upcoming CEO transition introduces an additional period of strategic change.

What Investors May Watch Next

Investors are likely to monitor several developments during the remainder of FY26.

These include completion of the Killara Feedlot sale, progress on Delta integration, delivery of expected procurement synergies and further reductions in debt levels.

Attention will also focus on the FY26 full-year results, expected around November 2026, together with updated leverage metrics, the final dividend and René Dedoncker's strategic priorities following his appointment as Chief Executive Officer.

The Delta Agribusiness acquisition has significantly expanded Elders' scale and market presence. The company's ability to convert that expansion into stronger long-term returns while restoring balance sheet flexibility will remain a key focus over the coming reporting periods.