Futuris’ Revamp.

Agribusiness group Futuris is changing its name, revamping its business to generate more cash; but will incur more losses in doing so. The company said in an update to the market and a letter to shareholders that the underlying loss may be about $9 million in the six months to December 31. The company indicated that a net topline loss of net loss of $176.3 million for the December half, compared with net income of $27.5 million a year earlier.

It may have a full-year net loss of $110.1 million, compared with net income of $36.4 million in fiscal 2008, which was a depressed year with poor sales from its forestry managed investment business, OTC. It cut its full-year forecast for underlying profit after tax to $60 million. The changes follow a change of CEO earlier in the year with Malcolm Jackman taking over in September.

Futuris will also change the company’s name to Elders Ltd, as its rural unit, its biggest earner, is known. It will take $204 million in one-time charges or write-downs, which is expected to be offset by asset sales of $350 million, including its stake in Australian Agricultural Co. Those asset sales will happen, but given the state of credit and equity markets, it’s hard to see them happening quickly.

In the letter to shareholders, the company said: "The Agenda for Change announced today incorporates one-off impairment charges or write-downs for 8 non-core businesses or assets as the Company implements its strategy of focusing on its core Elders agricultural services businesses," it said in an update statement to the ASX. "Impairments and write-downs anticipated for the FY09 accounts and announced today total a net $204 million after tax. "This is expected to be offset to a large degree by the gain realised on the sale of the company’s shareholding in Australian Agricultural Company which is currently the subject of an ongoing sales process.

In addition, anticipated non- recurring items totalling a charge of $56.4 million after tax have been announced "The revised earnings expectation takes into account the anticipated impact of market conditions on its Financial Services, Forestry and Automotive operations and a stronger projected uplift in performance from Elders Rural Services, which has just completed the second stage of its Business Transformation Project. "Underlying (prior to non-recurring items and impairments) EBIT for the twelve months to 30 June 2009 (FY09) is now expected to approximate $136 million. FY09 underlying profit after tax to shareholders is forecast to approximate $60 million.".

Tue Dec 2008 12:12 (1 month, 1 week ago)