Elders has started offloading its struggling forestry business, blaming weak woodfibre demand and poor prices.
The agribusiness announced today that it had sold surplus land in central Queensland from its forestry business for $19 million.
Further properties were close to being sold in what is a staged divestment of all forestry assets. It has also sold its 50 per cent share in a grain trading joint venture to concentrate on grain accumulation.
The company's shares had shed one cent, or 3.45 per cent, to 28 cents by 12.24pm AEDT, and have fallen 23 per cent in the last four weeks.
Elders' divisions include rural services, automotive and forestry, which involves the management of 170,000 hectares of hardwood plantations across Western Australia, Victoria, South Australia and Queensland.
The extra money would be used to reduce debt and reinvested in other operations, Elders managing director Malcolm Jackman said in a statement.
He said falls in woodfibre demand and prices had depressed returns.
"The capital invested in forestry is not providing sufficient benefit to our share price, earnings or cash flow and, in our view, the case for retention and ongoing investment no longer measures up for shareholders," he said.
Elders said it expected to post an underlying net profit of between $1 million and $5 million, including results from selling the grain trading share and a livestock ship.
That compares to previous forecasts of between $7.5 million and $24.5 million in May, and $15 million and $30 million in March.
It said on Monday that it still had more material information to provide to the ASX, including the progress of sales, value adjustments, impairment amounts and anticipated costs and charges.
In May, Elders posted a $14.6 million first half loss, with an increased contribution in underlying earnings from it's rural services division and cost cuts, offset by reduced earnings for its forestry and automotive divisions.
The forestry operations were hit by weak demand due to the Japanese tsunami, uncertainty created by high exchange rates and ongoing woodchip price negotiations with Japanese buyers and damage to assets in Queensland from Cyclone Yasi.
AAP
