Elders wields axe in bid to stem losses

Rural services company Elders is set to axe about 150 jobs, 10 percent of its workforce, as it reorganises its business and reduces debt.

Chief executive Malcolm Jackman said the jobs would go from across the company’s operations.

‘‘It became pretty obvious in the first half of this year, with the very tough seasonal conditions that we operated under, that the cost structure in the business was not sustainable,’’ he said.

Elders is aiming to cut operating costs by more than $25 million, from April 2014. A small number of rural and regional branch offices will be closed or consolidated into

larger nearby branches.

Shares in Elders surged 10.5 per cent to 10.5¢ each as it also confirmed it had struck a deal with its bankers on renewing and extending its debt facilities to the end of 2014. The debt agreement allowed Elders to reposition itself as a pure

agribusiness company, Mr Jackman said.

He said the sales process for Elders’ agricultural business was off the table now that refinancing was in place.

Elders in August sold its Futuris automotive interiors business, using the sales proceeds to cut its net debt to $272 million.

The group has almost completed the wind-down of its forestry assets and has agreed in principle with insurer QBE to reduce its equity holding in the joint-venture

Elders Insurance to 10 per cent, from 25 per cent.

Mr Jackman said the final exit from the forestry sector was a ‘‘zero sum’’ game that would not yield any extra cash.

Elders said seasonal conditions in the sheep and wheat belts of southern Australia had improved. Sheep and lamb prices had lifted and sales of fertiliser and agricultural

chemicals had improved.

Beef sales volumes in Asia, especially China, remained strong.

Elders said it expected to report an underlying net loss for the year to September 2013 of $32 million to $39 million.