Elders faces grim future
June 22, 2010
Elders Limited (ELD) shares tumbled over 40% Tuesday morning after the beleaguered rural services company downgraded its full-year profit guidance from a $55 million profit to a loss of between $8 million and $14 million. The company said the collapse in earnings was due to a slump in revenue as farmers moved to generic, cheaper brands, compounded by the previous downgrade to MIS sales.
Chief executive, Malcolm Jackman said that the revised earnings outlook reflected fundamental changes in the Rural Service and Forestry markets which had outweighed the improvements in operations, cash and cost management by the company.
Mr Jackman said costs to sales across the company were at unsustainable levels.
”We have initiated action to re-set our cost to serve in the near term to that required for satisfactory returns and to improve sales revenue performance over time,” Mr Jackman said.
He said Elders planned to reduce its cost to serve by $45 million, or 11%.
Mr Jackman said the company would cut staff including the resignation, with no replacement, of Mike Guerin, the company’s chief operating officer.
Overall, it was predicted staff numbers would be slashed by around 10%.
Despite the dire trading outlook, the company said its balance sheet remains strong, with over $100 million in cash in the bank and was within debt covenants.
Elders, which first listed 29 years ago, hit an all-time low of 44.5c at 1036 AEST.
Chief executive, Malcolm Jackman said that the revised earnings outlook reflected fundamental changes in the Rural Service and Forestry markets which had outweighed the improvements in operations, cash and cost management by the company.
Mr Jackman said costs to sales across the company were at unsustainable levels.
”We have initiated action to re-set our cost to serve in the near term to that required for satisfactory returns and to improve sales revenue performance over time,” Mr Jackman said.
He said Elders planned to reduce its cost to serve by $45 million, or 11%.
Mr Jackman said the company would cut staff including the resignation, with no replacement, of Mike Guerin, the company’s chief operating officer.
Overall, it was predicted staff numbers would be slashed by around 10%.
Despite the dire trading outlook, the company said its balance sheet remains strong, with over $100 million in cash in the bank and was within debt covenants.
Elders, which first listed 29 years ago, hit an all-time low of 44.5c at 1036 AEST.
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