Higher costs take the shine off

Research evidence excerpt

Higher costs take the shine off

Macquarie Equity Research Elders

Key Risks to Investment Thesis Company Description

• Seasonal conditions: Adverse climatic conditions and Elders is a diversified Australian agribusiness that operates

other natural events may reduce the output of relevant six main business units: Retail Products, Wholesale Products,

agricultural products and affect the operation of Elders’ Agency Services, Real Estate Services, Financial Services, and

business. Demand for AgChem products and fertiliser is Delta Agri. Elders services over 40,000 primary producers

highly dependent on seasonal conditions. Feed for livestock across Australia and international markets throughout the

is also dependent on rain, with the latter influencing the entire production lifecycle to provide products, marketing

supply and cost of feed. options, and specialist technical advice across retail, agency

• Commodity price volatility: Elders has exposure to and financial product and service categories.

movements in commodity prices, exchanges rates and

volumes of Australian rural production in its Agency, Retail

and Feed and Processing operations. Elders’ performance is

impacted by livestock, wool, grain, feed, farm supplies and

fertiliser prices, which are determined by global supply and

demand. Elders is also impacted movements in real estate

prices.

• Biosecurity: An outbreak of a systemic animal or plant

disease can lead to quarantine conditions, including the

restriction of movement of cattle in rural Australia, and

reduce producers’ need for goods and services or affect

their ability to operate.

• Livestock export: Elders supplies sheep and cattle to

livestock exporters. Elders may be impacted if demand

from livestock exporters is adversely affected by the