He said the summer cropping season was likely to be down by about 30 per cent but Elders expected the winter cropping season to be around average.

Mr Allison said record low interest rates were having a different impact on the rural real estate market compared with metropolitan residential real estate.

The tougher conditions hadn’t resulted in asset values of rural holdings falling substantially.

“The values are still holding pretty well,” he said. Buyers and sellers of pastoral holdings knew that valuations were struck on average season earnings, not on one poor year.

Mr Allison said Elders had lifted its internal hurdle rates for any bolt-on acquisitions it would examine, with 2019-2020 likely to be more of a year of consolidation.

“We’ve become very, very discerning,” he said.

Elders on November 13 will take ownership of the Australian Independent Rural Retailers business which it acquired for $187 million in July.

AIRR is the wholesale supplier of about 6000 products to 240 independent rural merchandise retailers and about 100 Tuckers Pet and Produce stores. It has annual revenue of about $500 million. The acquisition also brings AIRR’s two private label product ranges, Apparent in farm chemicals and Independents Own in animal health and feed. Elders acquired AIRR so that it can compete better in the wholesale supply of farm products after  Canadian fertiliser giant Nutrien bought Ruralco for $469 million.

Mr Allison said Elders had a sharp focus on delivering solid returns to shareholders through the inevitable ups and downs of the agricultural cycle, after painful lessons were learned previously when the company was run by different management.

Elders Ltd almost collapsed during the global financial crisis in 2008 and 2009 because it was weighed down with $1.4 billion of debt after aggressively expanding into a range of other industries, including telecommunications, forestry, automotive parts, insurance, aquaculture and even fine china tableware.

Mr Allison, who took over in 2014, spearheaded an “eight-point plan” turnaround program after Elders became a pure-play agricultural company again.

In regions in New South Wales and Queensland which were the worst affected by drought, Elders was prepared to sustain losses at its local branches to support local communities.

“We don’t close them,” Mr Allison said.

“We just maintain the losses in those particular branches,” he said.

The company expects sheep prices in Australia to rise in the next 12 months to above the five-year historical average, in part because of solid demand from China. Elders said the sheep flock in Australia fell to its lowest level in 115 years in 2018-19.

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