Struggling rural services business Elders has confirmed there are no immediate plans to break up its real estate arm as part of the company’s ongoing asset sell-off in its battle for survival.
Announcing its half-year results last week, Elders said it was turning a corner after recent big losses, with new CEO Mark Allison stating that traditional rural agency operations are driving profit, including a higher turnover in residential real estate markets.
Andrew Brien, state manager for Elders in Western Australia, told Residential Property Manager's sister title, Real Estate Business, the company’s real estate division is flying at the moment.
Mr Brien said there’s "definitely not” been a big plan to break up the real estate division, and instead affirmed the company is looking to grow rent rolls and increase its footprint by opening new offices.
Commenting on the half-year figures, Mr Brien said Elders’ real estate margin had increased by $1.2 million, “through a higher turnover in both broadacre and residential real estate sales", with additional sales spiking during the period by 724. The real estate business hit $2.38 billion in sales, up $300 million in the same period last year.
Mr Brien said key to this has been increasing its sales force by five per cent, adding that the company has no strategy to divest its real estate assets.
“The real estate part of the business is flying, we made some changes 12 months ago and they’re starting to pay off,” he said.
"We’ve recruited some really good people. We went out with a clear strategy to meet people who have our core values ... we've been really fussy about who we recruit. We've been quite patient to get the right people," he added.
He pointed to Elders establishing 14 new franchises on last year - a figure the business looks set to eclipse this year, he stated.
“Within our business we have 146 franchisees doing real estate, which is a big footprint across the whole country," Mr Brien said.
Elders interim financial results across the whole business, which cover the last six months to the end of March, showed an underlying profit of $6.7 million, a turnaround of $30.4 million on the loss of $23.7 million in the prior corresponding period. However, it reported a statutory loss of $10.2 million after tax.