Elders poised to sell off Futuris Automotive
BY TERRY MARTIN | 18th Jun 2013
In a statement, Elders managing director Malcolm Jackman said it had entered into a “short period of exclusive negotiations” with one of three final bidders for Futuris, which is expected to result in a binding contract for the sale of its automotive business.
“Elders is comfortable with how the sale of Futuris Automotive has progressed and we are confident that we will reach a binding contract very soon,” Mr Jackman said.
The company has been evaluating bids for both Futuris and its rural services businesses since last Friday, when it halted trading on the Australian Stock Exchange while it negotiated the proposals. It has since rejected the proposal for the sale of rural services.
Elders has been under pressure to sell off Futuris, having announced an unexpected $303 million interim loss at the end of last month for the first half of its current financial year (to March 31), which included a $166.5 million writedown on the value of Futuris Automotive.
It said at the time that the sales processes for both its automotive and rural services divisions were well advanced, although today Mr Jackman said the proposal it had received for rural services was rejected for several reasons “including value, execution risk, and other material considerations”.
Elders’ first-half financial results show that its operational earnings before interest and taxes (EBIT) from Futuris was $5.0 million compared to $5.4 million in the first half of its previous financial year, although sales were up three per cent which the company said reflected “increased sales overseas offset by lower domestic vehicle build volumes”.
It said this was considered “a strong result in light of the prevailing industry conditions”.
“The automotive result reflects the strength of our diversified, global manufacturing model, with increasing focus on China, Thailand and the United States,” Mr Jackman said.
“Subject to the timing of the outcome of the sale processes for automotive and rural services, the outlook for the second half looks more favourable.
“This assumes a return to normal seasonal conditions, execution of a strong forward shipping schedule in the international trading operations and improved production volumes flowing from the VF Commodore launch and overseas operations benefiting the automotive business.”
