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Free trade benefits to take time: Elders

Posted on 01/31/2019 | in 深圳桑拿网 | by

Agribusiness Elders says there’s a long way to go before it sees any benefit from Australia’s $18 billion free trade agreement with China.

深圳桑拿网

The FTA should mean higher sales of feeder and slaughter cattle to China, but clarity was needed on the protocols governing live cattle shipments, capacity and sourcing, chief executive Mark Allison said.

“The outlook is more positive – I don’t think there is any doubt of that – but talk is always cheap before the event, and we’ve got a long way to go,” he said as Prime Minister Tony Abbott prepared to sign the FTA with Chinese President Xi Jinping on Monday.

Mr Allison said Elders’ approach to China’s potential market would be measured, methodical and based on clear capital return imperatives.

Under the FTA, 85 per cent of all Australian exports will enter China tariff-free, News Corp Australia reported.

This is expected to rise to 93 per cent within four years and 95 per cent when the deal is fully in force in more than a decade.

Elders, one of Australia’s largest exporters of live cattle, also said it had commissioned a new IT system to improve transparency and traceability throughout its live export business supply chain.

The company – which also sells farm supplies; markets livestock, wool and grain; and provides real estate, insurance and banking services – on Monday announced a return to profitability after slashing costs and generating higher earnings from its agency and live export businesses.

It made a $2.98 million profit in the 12 months to September 30, compared to a $505 million loss in the previous year.

Underlying profit was $8.8 million, up from a $68.5 million loss a year ago.

Elders cut costs by 10 per cent during the year and reduced net debt by 46 per cent as it completed the sale of non-core assets.

Mr Allison said there had been good improvement across all of Elders’ product and geographical segments.

Although dry weather resulted in lower demand for agricultural chemicals, Elders’ retail products business still improved margins by two per cent.

On outlook, Mr Allison said there was strong demand for cattle out of Indonesia and Vietnam, and with a tighter supply of cattle in northern Australia, there was clear upward pressure on prices.

Activity in rural real estate was positive, and there had been an lift in Elders’ financial services business, which was a key area for growth.

Demand for feed and processing services, and live exports, was strong.

“The critical point that we see around these areas is supply, and in the live export area, shipping capacity,” Mr Allison said.

Mr Allison said Elders would build on its business improvements.

“Now that we have the right foundation, we can focus on the structured implementation of our eight-point plan and work towards achieving our target of $60 million EBIT (earnings before interest and tax) and 20 per cent return on capital in 2017,” he said.

LIVE EXPORTS HELP RETURN ELDERS TO PROFIT

*Net profit of $2.98m, up from $505.2m loss in 2012/13

*Revenue of $1.43bn, up one pct from $1.42bn

*No final dividend

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