AFGRI dominates the WA agricultural market with its tractors, sprayers and harvesting equipment. It also has its mitts on construction, forestry and commercial/residential equipment such as excavators, loggers and ride-on lawnmowers. The John Deere franchisor runs 19 out of 21 dealerships in the state and has a 41 per cent market share of large equipment sales, competing with Case IH, New Holland Agriculture and Kubota.
John Deere distributor AFGRI Australia earns about 55 per cent of its gross profit from recurring parts and servicing sales. Ellerston Capital
AFGRI’s parts and service earnings are expected to represent more than 50 per cent of gross profit in FY25, or over $60 million. Another 40 per cent, or $45 million, is forecast to flow from new equipment sales.
Ellerston acknowledged that equipment revenue was expected to normalise this financial year after several years of record yields and the expiration of the instant asset write-off in June last year.
As such, revenue is forecast to fall 22.8 per cent to $635 million and gross profit is tipped to decline 15 per cent to $111 million. The fund expects strong growth in AFGRI’s construction and forestry division, and 8 per cent growth in parts and services revenue on the back of strong sales and expects inter-state M&A opportunities to be a driver of future earnings.
Ellerston’s Industrial fund has had a busy year, plugging into Brisbane’s NOJA ahead of a second-half IPO. It also holds infrastructure services provider ARA Group and insurance premium funder Attvest.
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