Climate on the agenda: Here’s how ASX stocks exposed to warming effects are going
Food & Agriculture
Food & Agriculture
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Marches took place across the world on Friday, as tens of thousands of school students protested against government inaction on climate change.
And they’re not the only ones being affected by the effects of global warming and large-scale climate change: a Stockhead analysis shows that stocks with exposure to climate change effects are down 7 per cent in the past six months.
One of the bigger companies in the sector, livestock and farm supplies seller Elders (ASX:ELD), told investors late yesterday that it would fail to grow its bottom line in the 2019 financial year.
Its shares are down 17 per cent in the past six months, and fell by 3 per cent to a low of $5.88 on Friday. They are trading at 17-month lows.
The company said it is continuing to work through “challenging conditions experienced with the ongoing drought in the eastern states and flooding in northern Queensland”.
It says FY19 profit will be between $61 million and $64m — 2018 full-year profit was $63.7m.
Elders also warned investors its half-year results would be “materially lower” than the year prior, thanks to “lower wool volumes and increases in costs associated with footprint growth”.
“The forecast results reflect our commitment and resolve to achieve continuous high quality growth, despite the very difficult trading conditions being experienced by the Australian agriculture sector, including many of Elders’ clients,” CEO Mark Allison said.
Stockhead took a look at stocks exposed to the risks of climate change back in September, revealing very few of them were disclosing the risks to shareholders.
It comes at a challenging time for Australian business seeking to work through the issues. Guy Debelle, deputy governor of the Reserve Bank of Australia, recently delivered a speech focused on climate change and the economy, saying the effects have become permanent, rather than temporary cyclical events.
“The physical impact of climate change and the transition are likely to have first-order economic effects,” he said.
“We need to think about how the economy is currently adapting and how it will adapt both to the trend change in climate and the transition required to contain climate change. The time-frame for both the impact of climate change and the adaptation of the economy to it is very pertinent here.
“The transition path to a less carbon-intensive world is clearly quite different depending on whether it is managed as a gradual process or is abrupt. The trend changes aren’t likely to be smooth. There is likely to be volatility around the trend, with the potential for damaging outcomes from spikes above the trend.
“There is also likely to be significant volatility around that outcome, with an increase in the frequency of extreme temperatures.”
And there are plenty of companies experiencing that volatility of late. Fruit and vegetable seed maker Abundant Produce (ASX:ABT) is down 37 per cent to 11c in the past six months, while livestock exporter Wellard (ASX:WLD) is down 35 per cent to 5.2c.
Aquaculture companies have also been hit, with Seafarms Group (ASX:SFG), Clean Seas Seafood (ASX:CSS), Ocean Grown Abalone (ASX:OGA) and New Zealand King Salmon (ASX:NZK) all experiencing share price downturn.
Only nine companies have bucked the trend, with four aquaculture stocks and grain storage giant Graincorp (ASX:GNC) among the winners.
Here’s a list of key agri-focused companies that could be at risk from climate change:
Swipe or scroll to reveal full table. Click headings to sort
|ASX code||Company||6-month price change||Price Mar 15||Market Cap|
|CSS||CLEAN SEAS SEAFOOD||-20%||0.935||$78.9M|
|MCA||MURRAY COD AUST||6%||0.175||$73.4M|
|MRG||MURRAY RIVER ORG||3%||0.099||$42.9M|
|NZK||NEW ZEALAND KING||-6%||2.34||$324.3M|
|OGA||OCEAN GROWN ABALONE||-11%||0.17||$29.6M|
|WOA||WIDE OPEN AGRI||20%||0.18||$12.7M|