The head of rural services company Elders has said sorry to shareholders after flagging a full-year loss, job cuts and plans to reduce costs by $45 million in response to low prices for farm supplies.
Shares in Elders plunged 46 per cent, or 38 cents, to a record low 44 cents in response to the profit downgrade, wiping off about $175 million from its market value.
Elders chief executive Malcolm Jackman.
Underlying earnings for the 12 months to September 30 now was expected to be a loss of between $8 million and $14 million, Adelaide-based Elders said in a statement on Tuesday.
That compared with the original prospectus target of a profit of $55.7 million, the company said.
Elders chief executive Malcolm Jackman said the company was not earning enough revenue, particularly from key rural service sales period in the three months to June, to achieve previous guidance, despite improvements in volumes, costs and margins.
''I apologise to all the shareholders who are listening in,'' Mr Jackman said during a conference call.
''These numbers are not the numbers that we as a management team and particularly I as a CEO want to be talking about.
''We are taking decisive action to try and rectify the situation and you will need to continue to be patient with Elders on the way through.''
In recent trade, the stock had slumped 43.9 per cent, or 36 cents, to 46 cents, the lowest since the company was listed in 1981.
Elders was far and away the worst-performing stock on the S&P/ASX 200.
IG Markets market strategist said the announcement was ''yet another blow to shareholders who helped recapitalise the company back in September on the lure of a vastly improved second half''.
''One would have to think that management are going to come under intense scrutiny, with institutional holders likely to question their credibility and ongoing role with the company,'' Mr Potter said in a research note.
Elders had planned to deliver a trading update in the middle of July, but brought forward the announcement after looking at trading figures for April and May.
The company hoped to finalise initiatives to deliver the targeted $45 million annual cost reduction in place by December this year.
''I know we are getting a reputation as being a company that only has bad news but unfortunately we are where we are,'' Mr Jackman said.
''And I need to keep pushing forward with the management team that is with me to deliver the right sort of outcomes.''
Job cuts amounting to 10 per cent of the workforce would be made through natural attrition and tougher ''consequence management'', with redundancies to be avoided.
In addition, chief operating officer Mike Guerin resigned because his position was no longer viable and John Molenaar, who was head of the company’s Australian network, resigned as part of the cost cutting.
''We are going to move to a leaner, more organised structure,'' Mr Jackman said.
''I believe our cost to sales ratio is unsustainable in current markets.''
Elders said its cash position was strong, with $110 million in cash and available credit at May 31. The company also said it was well within its financial covenants.
''For the numerous competitors who will be sitting on this call and will want to bag relentlessly in the marketplace and tell everybody that we are going broke, please note that we have plenty of cash in this business,'' Mr Jackson said.
AAP