In an eventful day for Elders Limited, the agribusiness major has announced a reduced but robust full-year profit along with a $475 million acquisition of rival agribusiness Delta Ag.

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Founded in 2006, Delta Ag provides rural products and advisory services through a network of 68 locations and approximately 40 independent wholesale customers.

Elders’ financial results for the 2023/24 financial year ended September 30, announced to the ASX this morning, were headlined by a statutory net profit after tax of $45.1 million, which compares to a $100.8 million profit result in FY23.

Lower livestock prices in the second half of 2023 were a key contributor to the 55 percent year-on-year reduction in net profit, according to the Elders full FY24 results statement, which also included underlying earnings before interest and tax (EBIT) of $128 million, down by 25pc on FY23.

Elders has declared a final dividend of 18 cents per share, with 70pc franked.

Describing its FY24 earnings as “resilient”, the Elders statement said improved second half trading partially offsetting the negative earnings impact from the first quarter which resulted from low livestock prices, lower crop protection margin and subdued client sentiment.

Elders, with a market capitalisation of $1.4 billion, today announced it has entered into an agreement to acquire 100 percent of the shares in Delta Agribusiness Pty Ltd for an enterprise value of $475 million.

Established in 2006, Delta’s rural products include crop protection, seeds, animal health products, fertilisers, fuel and general merchandise.

It also owns an in-house agricultural chemicals and animal health private label brand, Four Seasons Agribusiness, with 106 Australian Pesticides and Veterinary Medicines Authority registered products and has approximately 45,000 tonnes of fertiliser storage on the East Coast.

The acquisition was backed by a “compelling strategic rationale with a complementary geographic footprint”, filling retail gaps in New South Wales, North West Victoria, South Australia and Western Australia, and enhancing Elders’ technical expertise and offering in ag tech and precision agriculture” the statement said

Trading in Elders shares was halted on Monday  ahead of the company’s acquisition announcement. Elders said the Acquisition is to be funded through a $246 million fully underwritten pro rata accelerated non-renounceable entitlement offer, a $110 million new revolving loan facility and $190 million of new Elders shares issued to Delta shareholders as scrip consideration at $8.52 per share (approximately 22 million shares).

Elders Managing Director and CEO Mark Allison said “the acquisition of Delta continues Elders’ successful track record of growing our business through disciplined acquisitions. Delta provides us with greater exposure to key local retail markets as well as a leading agronomy and farm advisory team to complement and extend our products and services range for rural and regional Australia”.

Delta Managing Director and Co-Founder Gerard Hines said there is strong cultural alignment between Elders and Delta.

“Our management team will remain unchanged and we are excited to be able to continue to provide our customers with innovative and value adding business solutions with the added support of Elders.”

Meanwhile, reflecting on Elders FY24 results, Mr  Allison said Elders’ consistent application of its Eight Point Plan principles was key to the business delivering shareholder value through the cycles.

“This year we entered our fourth Eight Point Plan and refocused our attention on achieving growth while maintaining strict financial discipline,” Mr Allison said.

“We continued to grow by expanding our network, adding 21 points of presence, and investing in projects of strategic significance, like our Systems Modernisation project, and our new wool handling business.”

Performance by specific business area included:

Retail Products – sales uplift in the animal health category, offset by weaker fertiliser and crop protection sales, predominantly impacted by lower prices.

Wholesale Products – margin growth with animal health products benefiting from the recovery in livestock prices following the first quarter lows.

Agency Services – margin increased, driven by an improvement in cattle and sheep prices since the end of FY23 (21pc and 59pc respectively) and continued volume improvements across both cattle and sheep.

Real Estate Services – margin grew predominantly due to recent acquisitions, most notably the business previously known as Knight Frank in Tasmania, and improved broadacre demand following the recovery in the livestock market.

Financial Services – earnings improved with a significant uptake in Elders’ own livestock funding offerings, along with considerable progress in the transition to an expanded broker model with regionally based lending brokers.

Feed and Processing Services – margins recovered from negatively impacted trading conditions in Q1, with improvements in feeder cattle prices and lower feed prices benefiting the second half of FY24.

Outlook for 2024/25

Elders Ltd’s FY24 results statement to the ASX included an optimistic outlook for the grain sector with favourable moisture profiles in many dryland areas pointing to a positive 2024 summer cropping season.

Elders also expects price stability in livestock market but notes that livestock volumes might be impacted in FY25 from dry conditions in South Australia and Victoria in FY24.