Elders to cease live exports of cattle and sheep

Agribusiness Elders will sell its subsidiary North Australian Cattle Company (NACC), and thus exit the live export business.

As the ABC reports, NACC currently ships cattle to Indonesia, Vietnam and Malaysia and flies cattle and sheep to China.

The move follows a comprehensive review of the company’s live export business and, according to CEO Mark Allison, does not reflect on the viability of the industry as a whole.

He said in a statement that the company remains supportive of the live export industry, and the business remains committed to the needs of its livestock producer clients.

“Our focus remains on increasing client access to a range of markets, including live export markets for their stock, and we will continue to work with industry live exporters to market our clients’ livestock,” Allison said.

He added that the export, logistics and shipping of live cattle to long haul destinations is no longer central to Elders’ strategy.

“Elders reported a loss of $2.9m from its Live Export businesses in the 6 months to 30 March 2016.  That poor result had included a loss of $3.8m attributable to the long haul business.  Since that report, margin performance in the long haul business has continued to be poor and we believe that margins are unlikely to recover in the near to medium term,” said Allison.

“In addition, we do not see that the China feeder and slaughter trade, which is yet to fully open, will deliver margins or a return on capital at levels that meets our, and our shareholders’, expectations.  As a result, we consider that the long haul of live cattle is best suited to specialist logistics operators.”

Elders expects an underlying EBIT for the full year to 30 September 2016 in the range of $54-57m.

This result reflects better than average retail activity due to seasonal conditions and strong livestock prices driving the agency result. Conversely, high cattle prices have impacted margins in the Feed and Processing businesses.

Upon finalisation of the Live Export exit, Elders’ will have circa $25m of working capital which can be redeployed in areas that meet return on capital expectations.

Image: The Advertiser

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