This article first appeared on GuruFocus.

EBIT: Increased by 12% year-on-year. Revenue: Increased by $70.4 million, or 2.2%. Gross Margin: Increased by $47 million to $684.6 million, up 7% year-on-year. Return on Capital: Steady at 11.3%. Net Debt: Increased by $20.5 million to $457.3 million. Leverage: Reduced from 3.1 times to 2.9 times, normalized for Delta funds held. Cash Flow: Operating cash inflow of $117.9 million. Agency Services Gross Margin: Increased by $27.1 million, or 22%. Real Estate Services Gross Margin: Increased by $22.5 million, or 27.2%. Feed and Processing Gross Margin: Increased by $4.1 million, or 23.8%. Financial Services Gross Margin: Increased by $2.3 million, or 4.2%. Costs: Increased by $11.4 million, or 2.2%, when adjusted for acquisitions and transformation. Working Capital: Increased by $68 million, mostly due to higher cattle prices. Delta Agribusiness Acquisition: Completed on November 3, 2025.

Warning! GuruFocus has detected 10 Warning Signs with ASX:ELD. Is ASX:ELD fairly valued? Test your thesis with our free DCF calculator.

Release Date: November 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Elders Ltd (ASX:ELD) reported a 12% increase in EBIT, demonstrating solid financial performance despite challenging seasonal conditions. The company's diversified portfolio, including livestock, real estate, and financial services, helped mitigate the impact of dry conditions in key agricultural regions. Elders Ltd (ASX:ELD) completed the acquisition of Delta Agribusiness, enhancing its geographic diversification and technical expertise in agtech and precision agriculture. The company is optimistic about the FY26 outlook, with a positive seasonal and commodity outlook expected to support growth in livestock, real estate, and financial services. Elders Ltd (ASX:ELD) has made significant progress on transformational projects, including the SISMOD project, which is expected to enhance operational efficiency and retail margins.

Negative Points

The FY25 season was challenging due to drier than average conditions, impacting crop protection sales and client confidence in some regions. There was an increase in lost-time injuries, particularly in the livestock area, which is a setback in the company's safety performance. Elders Ltd (ASX:ELD) experienced margin compression in crop protection due to competitive pricing pressures and dry conditions. The company reported a sizable impairment of goodwill related to certain acquisitions, highlighting challenges in post-earnout staff retention. Net debt increased by $20.5 million, with leverage remaining above the target range, although a return to target is expected in FY26.

Story Continues

Q & A Highlights

Q: What is your view on livestock volumes for the upcoming year, considering the current herd sizes and livestock prices? A: Paul Rossiter, CFO: There is some uncertainty, particularly in sheep volumes, which were down 8.1% in FY25. We expect a rebuild in SA and Western Vic, which might drag on sheep volumes into FY26. Cattle volumes were up 13% in FY25, and we expect prices to offset any volume tapering due to strong international demand for Australian protein.

Q: Can you provide details on the crop protection gross profit decline and the associated product volume? A: Paul Rossiter, CFO: The gross profit decline was about 9% due to dry conditions, with a $19 million impact mostly in Q3. While volumes were up in Northern NSW, they were down in SA and Vic. Margin compression was a significant factor, similar to other businesses in dry areas.

Q: What are your expectations for CapEx, interest, and tax for FY26? A: Paul Rossiter, CFO: Depreciation will increase with the completion of Wave 2 and continued SysMod amortization. CapEx will be dominated by SysMod, with $20-25 million expected in FY26. We will pay about $1 million in tax following the FY25 tax return submission, with pay-as-you-go tax thereafter.

Q: Can you elaborate on the expected benefits from SysMod in FY26 and the non-underlying OpEx impact? A: Paul Rossiter, CFO: The major benefits will come from an uplift in retail margins through better discount control and client categorization. A 1% uplift in retail gross margin percent equates to about $22 million. Non-underlying OpEx for FY26 is expected to be around 40% of the $20-25 million CapEx.

Q: What is the background of the goodwill impairment captured in the FY25 results? A: Paul Rossiter, CFO: The impairment relates to Care & Co, where we lost agents in Victoria, and Esperance Rural, which had an unsuccessful transition post-turnout. We've identified the need to focus on retaining staff post-urnout to prevent similar issues in the future.

Q: How do you plan to manage capital allocation and transition some receivables to third-party lenders? A: Paul Rossiter, CFO: We are taking a return-on-capital approach, transitioning clients without deep relationships to third-party financiers. This process has started and will continue incrementally over several years, with a significant start in FY26, particularly in financial services and seasonal finance.

Q: Can you provide insights into Delta's performance over the last 12 months compared to Elders? A: Paul Rossiter, CFO: Delta was more impacted by dry conditions than Elders due to its exposure and lack of livestock agency offset. However, trading has been above PCP since it started raining in July, indicating strong performance.

Q: What are the plans for system harmonization with Delta, and will there be any required CapEx? A: Mark Allison, CEO: System projects are predominantly for Elders. Post-Wave 4, any system alignment for Delta will be based on business cases. We aim for shareholder returns rather than ideological system uniformity, and current systems are operating fine.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

View Comments