Elders China, the premium meat business previously known as Elders Fine Foods, has been building scale and profitability, posting a profit for the first time after years of losses, prompting chief executive Mark Allison to plan to apply the business model in Vietnam and China.
As demand for meat in Asia grows, Elders is planning to replicate the business model, examining the prospects of establishing feedlot operations in Vietnam and China to complement the group’s existing operation in Indonesia. Although beef import quotas have been reduced by the Indonesian government, the overall Elders business, who’s first half ends March 31, 2015 is reported to have performed ‘solidly’.
In 2014 as the future of Elders appeared in doubt, the business created an eight-point plan to drive a turnaround. Mark Allison states that the company is 95% on target, and that the business is on pace to deliver earnings before interest and tax of $60 million and a 20% return on capital by 2017.
Under its plan, Elders has trimmed down to being a pure-play agribusiness after expanding into forestry, aquaculture, telecommunications, automotive parts, insurance, and banking before the 2008 global financial crisis. In one of its final actions in its retrenching, Elders shrunk its share capital through a ten-into-one share consolidation earlier this year, since which its shares have made solid gains.
Elders overall business posted a net profit after tax of $3 million for the 12 months to September 20, 2014, after losing $505 million the year prior. Now the company is expanding its workforce in Asia as demand for premium meat in the region continues to grow and Elders continues to reverse its fortunes.
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