Elders Lifts Half-Year Profit 33% and Eyes Stronger H2 as Delta Ag Ramps Up

In its HY26 investor presentation delivered on 18 May 2026, Elders Limited (ASX: ELD) reported underlying EBIT of $76.6 million for the six months ended 31 March 2026, up 33% on the $57.6 million recorded in HY25. The result was driven by strong livestock prices and the first five months of Delta Agribusiness earnings, with sales revenue reaching $1,767.7 million (up 32%) and gross margin rising 27% to $396.6 million.

An 18 cents fully franked interim dividend was maintained, consistent with HY25. Management noted that key metrics including return on capital (ROC) and leverage are temporarily impacted by acquisition and divestment timing, and the presentation made clear these are expected to improve materially in H2.

First half FY26 by the numbers

The table below summarises Elders’ key financial metrics for the period against the prior corresponding half.

A standout in the result was cash conversion of 176.6%, up sharply from 93.1% in HY25, reflecting a significant improvement in capital efficiency despite working capital being at its seasonal peak for winter crop. Underlying EPS of 18.1 cents was modestly lower due to a timing mismatch, with Delta Agribusiness capital deployed ahead of a full twelve months of earnings. The presentation characterised this as a temporary dynamic rather than a structural decline. Similarly, the reported ROC of 10.7% reflects the same timing drag; the presentation outlined a normalised ROC of 12.1% once Delta Agribusiness, transformational projects, and acquisition adjustments are stripped out.

Managing Director and CEO, Mark Allison

The presentation noted that current metric softness in ROC and leverage reflects a temporary drag, as capital investment has preceded the associated earnings over the past 12 months, and that the position is expected to improve materially in the second half as Delta Ag earnings are included on a full-year basis and Killara divestment proceeds reduce net debt.

What’s driving divisional gross margin growth

All five divisions contributed to gross margin growth in HY26, with total gross margin of $396.6 million up materially from $276.5 million in HY24, the Fourth Eight Point Plan baseline year. Divisional underlying EBIT contributions were as follows:

• Elders Rural Services: $71.9m EBIT — livestock prices were the primary driver of Agency Services upside, with cattle averaging $1,824 per head and sheep averaging $221 per head
• Elders Crop Protection: $22.3m EBIT — Titan Ag’s procurement of raw materials improved margins through backward integration
• Elders Real Estate: $24.1m EBIT — residential turnover reached $1.7 billion, with more than 21,300 properties under management
• Delta Agribusiness: $10.4m EBIT — representing only the first five months of ownership, with earnings weighted to H2
• AIRR: $19.4m EBIT — higher costs offset improvements in sales, gross margin percentage, and warehouse efficiencies

Corporate costs rose to $59.4 million, largely due to dual-platform IT costs incurred during the Systems Modernisation (SysMod) transition, as the legacy AS400 system is not expected to cease until 2027.

Understanding the Eight Point Plan — Elders’ framework for growing through the cycle

The Eight Point Plan is Elders’ multi-year strategic framework, now in its Fourth iteration covering FY24 to FY26. The framework targets 5–10% EBIT and EPS growth through agricultural cycles at a 15% ROC, structured around three strategic pillars: Run (deepening customer relationships and maintaining financial discipline), Transform (systems and supply chain modernisation), and Innovate and Grow (acquisitions, margin expansion, and new services).

For investors, the framework’s significance lies in its track record. The prior three Eight Point Plans each delivered EBIT growth through materially different conditions, including El Niño, NSW drought, and La Niña cycles. Management is asking investors to view current softness in ROC and leverage as transitory, shaped by the timing of transformational investment rather than any structural deterioration.

The defining acquisition of the Fourth Eight Point Plan is Delta Agribusiness, which added 58 additional points of presence across Elders’ network. The total EBIT synergy target from the acquisition is $12 million over three years, and the presentation confirmed Elders is on track to realise $8 million of that in FY26 alone. Synergy streams span animal health, crop protection, procurement, corporate services, financial services, and real estate referrals.

Systems Modernisation — the final wave

SysMod is entering its final phase, with Wave 4 (Client/D365 ERP) detailed design completed in May 2026 and implementation now underway. The project’s progression to date is as follows:

1. Wave 2 (Retail) — complete
2. Wave 3 (Livestock) — rolled out and live
3. Wave 4 (Client/D365 ERP) — detailed design complete May 2026, implementation underway

ROC benefits of greater than 15% are expected from FY26, representing the first full year of Wave 2 benefits. The total Wave 4 budget is $19–23 million (combined CAPEX and non-underlying OPEX). The project concludes at the end of Wave 4, at which point dual-platform cost drag will cease.

Second half outlook — why management expects improvement across every metric

Management outlined four key H2 tailwinds in the presentation, each linked directly to the temporary drags visible in the HY26 numbers.

• Delta Agribusiness earnings are seasonally weighted to H2, with the full contribution now expected across the remainder of FY26
• Killara divestment proceeds of $195.8 million are anticipated to reduce net debt and lower interest expense once final regulatory approvals are received
• Working capital is expected to ease post the winter crop peak, with leverage forecast to decline from 3.8x to a target of less than 2.0x by FY26 end (normalised HY26 adjusted leverage is already 2.6x; core leverage sits at 1.5x)
• Cost pressure is expected to ease as Elders Rural Services transitions to a single technology platform and SysMod dual-running costs diminish

The presentation highlighted significant headroom across all banking covenants: leverage covenant headroom of 24%, interest cover headroom of 57%, and net worth headroom of 60% against a $500 million covenant threshold (actual net worth $1,254 million).

Divisional H2 outlook commentary from the presentation was as follows:

• Elders Crop Protection: focusing on procurement synergies with Delta Ag and expansion of existing formulation businesses
• AIRR: ongoing margin improvements and efficiency benefits
• Elders Rural Services: benefit from operating efficiency and retail margin optimisation, with continued growth in financial services products
• Delta Agribusiness: further upside expected, with sales weighted to the second half
• Elders Real Estate: uplift reflected by acquisitive and organic growth

The outlook is supported by favourable ABARES macro data. According to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) March outlook, cattle saleyard prices are forecast to rise 27% to 775 c/kg in FY26, sheep prices are forecast up 32%, the wool Eastern Market Indicator is forecast up 31% to 1,525 c/kg, and winter crop production is forecast at 68.4 million tonnes, representing the second-largest winter crop on record.

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