Australia's Elders flags diesel cost risks, shares hit near seven-year low (updated)

Elders

18/05/2026 07:00

Adds shares in paragraph 2, further details in 4-7

By Shruti  Agarwal

May 18 (Reuters) - Australian agribusiness firm Elders ELD.AX warned on Monday that elevated diesel prices linked to the Iran war could drive up costs in the second half of the year, sending its shares tumbling to their lowest level in nearly seven years.

Shares of the company fell as much as 25.7% to A$5.35, a level unseen since June 7, 2019. The stock was also among the top laggards on the broader S&P/ASX 200 benchmark index .AXJO, which was down 1.4%, as of 0541 GMT.

Elders said volatility in fuel and fertiliser prices pose challenges to its supply chain in the first half of the year and, although prices have eased from their March peaks, they are expected to remain a risk to costs in the second half.

The company, which supplies chemicals and fertilisers to farmers, said it will manage disruption by purchasing fertiliser only against confirmed customer demand and sourcing from a range of suppliers.

The closure of the Strait of Hormuz, which handles roughly one-fifth of the world's oil flows, not only pushed European benchmark diesel futures soaring about 80% in March, but also disrupted fertiliser supply from the Middle East, a key urea-producing region.

Costs at Elders have been also driven higher by its ongoing modernisation programme and the Delta Agribusiness acquisition completed in November 2025, with total costs surging 25% in the first half, the company said.

"Higher diesel costs remain a clear uncertainty, while elevated IT costs from the company's platform modernisation programme are expected to continue until 2027. That combination appears to have disappointed investors," said Cliff Man, CEO of ETF Shares.

"Given Elders operates on a low-single-digit operating margin, any sustained increase in fuel, freight or fertiliser-related costs could place meaningful pressure on earnings."

Elders reported a first-half profit attributable of A$39.5 million, up from A$33.6 million ($23.97 million) a year earlier, but missing the Visible Alpha estimate of A$43.2 million.

The company declared an interim dividend of 18 Australian cents per share, same as last year.

($1 = 1.4015 Australian dollars)

 (Reporting by Shruti Agarwal in Bengaluru; Editing by Subhranshu Sahu)

 ((Shruti.Agarwal@thomsonreuters.com;))