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Elders chief executive Malcolm Jackman inside his Currie Street office.
Photo: Kate Elmes
Battered and bruised share-
holders in South Australia s
biggest and oldest public
company, Elders, will have a long
wait before prospects improve.
With no dividends payable until
2012 and a collapsing share price,
this week s earnings downgrade
from a forecast profit to a loss
would have frightened even the
most loyal Elders investors.
"I apologise to all the sharehold-
ers; these are not the numbers I
wanted to talk about," company
chairman and managing director
Malcolm Jackman said.
Staff cuts, executive manage-
ment restructures and a change to
company culture will be unveiled
in the months between now and
In a warning to competitors Mr
Jackman promised the company
"will not go broke".
It s cold comfort for investors
in the rural services provider
with this latest bout of bad news
adding to the company s reputa-
tion for being slow to recognise
"We ve been running flat out to
go backwards," Mr Jackman said
when summing up his frustration
at achieving increased sales
volume but decreasing margins as
overseas agrichemical competi-
tion drives prices down.
Elders, established in South
Australia in 1839, is undergoing
one of the biggest cultural
changes in its history.
Its workforce was slashed from
4400 in 2008 to 3187 in 2009 and
another several hundred are
destined for the axe in the coming
How it does business is also
changing, but it may be too late.
On the eve of last week s
trading halt and earnings
downgrade Elders general
manager of marketing, Mark
Geraghty, outlined a shift in
business strategy, consigning 170
years of "stock and station agent"
tradition to history.
"Clearly Elders is not going
to prosper as a stock and station
agent, which is how it operated
for 170 years," Mr Geraghty told
the Committee for Economic
Development of Australia s
mid-year economic and markets
review in Adelaide.
"While we remain proudly
South Australian we do need to
reposition our business to be
"Our new strategy revolves
around productivity," he said.
The "new way" is based on
trends in the make-up of the
The rise and rise of corporate
farming has seen more than 20
per cent of farming families leave
the land in just five years.
Those who remain are now
competing with the economies of
scale and production efficiency
that a corporation delivers.
On the flip side, Mr Geraghty
said the corporates could also
learn a trick or two from the
local knowledge of farmers with
generations of connection with
"The need for advice will
grow, both with farmers and
corporates," he said.
Hence the shift by Elders
from stock and station agent to
Elders now finds itself
trying to balance the needs of
corporate farm operations where
cost imperatives outweigh the
"customer experience" sought
after by traditional farmers and
Around Australia the Elders
brand is managed by its 300 store
managers -- people very attuned to
the old stock and station culture.
Being asked to make significant
cost cuts for the second time
this year, how are those store
managers coping, Mr Jackman
"Do they feel the pressure?
Absolutely they do," he replied.
"But we are not seeing anything
unusual in terms of staff
Two key figures in the company
have already felt the pressure,
with chief operating officer Mike
Guerin and senior executive
John Molenaar resigning almost
While Elders continues to
grapple with its cultural change
and cost cutting, analysts have
savaged the former blue chip
"Realistically the market
is giving up on it," said Baker
Young s Toby Grimm.
"It s already been through a
management restructure and a
capital raising based on certain
revenue forecasts that just
haven t been realised," Mr Grimm
"In reality it s looking like a
flawed business model. It s a very
Market reaction to the Elders
announcement on Tuesday was
swift, with the already declining
stock taking a 45 per cent tumble
in the first few hours.
"It might get oversold and then
become an attractive investment
for traders hoping for a bounce
back, but it s hard to build an
investment case for Elders," Mr
"At the end of the day you need
a strategy to improve profits and
shareholder value, but what we
are seeing here is the trend of
losing money is continuing and
while they do have strong cash
reserves, you can t keep losing
Elders is in
free fall. Will a
change from the
old "stock and
it? asks Kevin
Elders' woes continue
Continued Page 12
Corporate - Adelaide
Piper Alderman is delighted to be able to announce the
following appointments, strengthening our national team.
Marissa Bendyk, Corporate - Adelaide
Deborah Overstead, Corporate - Brisbane
Mitchell Coidan, Dispute Resolution - Sydney
Steven Forrest, Dispute Resolution - Brisbane
Shaan Palmer, Dispute Resolution - Sydney
Simone Selkirk, Dispute Resolution - Sydney
Kathy Tsiaplis, Property & Projects - Melbourne
Kylie Barrie, Corporate - Adelaide
Maurice Lynch, Dispute Resolution - Sydney
Annabel Vadasz, Dispute Resolution - Sydney
Loretta Zandona, Dispute Resolution - Adelaide
Dr Teresa Schafer
Corporate - Sydney
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