Elders’ Revenue Climbs 32% on Delta Agribusiness Acquisition
Elders Limited lifted half-year revenue by 32% to $1.77 billion, with profit after tax rising 17% to $39.5 million, boosted by the Delta Agribusiness acquisition and improved seasonal conditions. The company declared an 18-cent fully franked interim dividend and advanced its new divisional model and systems modernisation.
- Revenue up 32% to $1.77 billion
- Profit after tax rises 17% to $39.5 million
- Delta Agribusiness acquisition adds $348 million sales
- Killara Feedlot classified as discontinued operation
- Interim dividend maintained at 18 cents fully franked
Delta Agribusiness Acquisition Fuels Revenue and Margin Growth
Elders Limited (ASX:ELD) delivered a robust first half for FY26, with revenue climbing 32% year-on-year to $1.77 billion and statutory profit after tax rising 17% to $39.5 million. The standout driver was the acquisition of Delta Agribusiness, which contributed $348 million in sales and $45.8 million in gross margin during its first five months under Elders’ ownership. This acquisition expanded Elders’ footprint and enhanced its technical capabilities, particularly in precision agriculture and farm advisory services.
The integration of Delta Agribusiness is progressing well, with synergy targets of $12 million EBIT over three years on track. Initial benefits are expected to be weighted towards the second half of FY26, supporting optimism for further earnings growth. The acquisition added significant goodwill of $267.6 million, reflecting the value of Delta’s geographic reach and workforce.
Meanwhile, Elders has fully implemented its new divisional reporting model, designed to improve accountability and operational efficiency. This structural change reclassified Elders Rural Services into Northern, Southern and Western regional divisions and aligned segment reporting accordingly, with prior period comparatives restated for consistency.
Killara Feedlot Divestment and Discontinued Operations
In a strategic move, Elders agreed to sell its Killara Feedlot business, a 20,000-head beef cattle feedlot, for approximately $196 million. The sale, subject to Foreign Investment Review Board and Australian Competition and Consumer Commission approvals, is expected to complete in the second half of FY26. Consequently, Killara is classified as a discontinued operation, with its financial results excluded from underlying earnings to maintain transparency and comparability.
The divestment proceeds are anticipated to reduce Elders’ net debt and leverage, improving key financial metrics in the second half. The company’s net debt rose to $901 million at 31 March 2026, reflecting acquisition-related financing and elevated working capital requirements, including a winter crop inventory peak.
Financial Performance and Operating Metrics
Elders reported a 27% increase in gross margin to $396.6 million, driven by strong livestock prices and real estate growth. Underlying EBIT rose 33% to $76.6 million despite a 25% increase in costs, largely due to acquisition and transformation expenses. The cost-to-earnings ratio improved slightly to 80.7%, reflecting operational efficiencies.
Operating cash flow more than doubled to $67 million, supported by EBITDA of $138 million adjusted for non-cash items. Cash conversion soared to 177%, aided by working capital management initiatives. The company refinanced its $465 million syndicated bank facilities, extending maturity to November 2029 and preserving its existing lender group, providing financial flexibility.
Return on capital dipped to 10.7%, below the 15% target, due to capital invested in Delta Agribusiness preceding a full year of earnings. Elders expects this metric to improve as earnings from Delta and proceeds from Killara’s sale come through the rolling 12-month calculations.
Operational Outlook and Industry Challenges
Looking ahead, Elders is well positioned for a stronger second half, with full-year earnings contributions from Delta Agribusiness and ongoing benefits from its Systems Modernisation program. The company continues to invest in strategic initiatives, including AI tools, to enhance customer experience and operational efficiency.
However, Elders flagged elevated diesel prices linked to geopolitical tensions in the Middle East as a persistent cost pressure. Fertiliser supply disruptions are being managed through a back-to-back purchasing model and diversified suppliers, mitigating potential impacts on the business and customers.
Leadership Transition and Corporate Governance
In leadership news, René Dedoncker is set to succeed Mark Allison as CEO starting 1 October 2026, with Allison remaining through a transition period. This appointment aligns with Elders’ strategic focus on agribusiness expertise and operational excellence. Additionally, Stephanie Nixon will take over as Chair of the Audit, Risk and Compliance Committee, succeeding Robyn Clubb.
Shareholders will receive an interim dividend of 18 cents per share, fully franked, consistent with the prior period. The dividend reinvestment plan remains open with a 1.5% discount on the volume weighted average price for shares issued.
These results build on Elders’ steady progress in its Fourth Eight Point Plan, following a 12% EBIT growth in FY25 and ongoing integration of acquisitions. The company’s diversified portfolio and renewed divisional focus are key to navigating agricultural cycles and market volatility, as reflected in its recent EBIT growth amid strategic expansion and CEO appointment and transition plans.
Bottom Line?
Elders’ growth trajectory hinges on realising Delta Agribusiness synergies and navigating cost pressures from fuel and geopolitical risks in the second half.
Questions in the middle?
- How will the full-year earnings from Delta Agribusiness reshape Elders’ financial metrics in FY26?
- What impact will the Killara Feedlot divestment have on Elders’ leverage and cash flow post-completion?
- Can Elders sustain margin growth amid elevated diesel prices and ongoing supply chain uncertainties?
