PGW plans to build on big profit rebound

ALAN WOOD
Last updated 05:00 13/08/2014

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PGG Wrightson has reported a $42.3 million net profit and expects significant improvements across the whole company.

The bottom line contrasts with last year's $306.5m annual loss, which came after PGW made a huge goodwill writedown.

The rural services company also announced it was implementing a new strategic plan.

Ahead of the result for the 12 months to June 30, the company's shares last traded at 39.5 cents, up from about 33c a year ago after the release of the 2013 annual result. In 2012, the Christchurch-based firm made a net profit of $24.5m.

Chief executive Mark Dewdney said PGW achieved operating earnings before interest, tax, depreciation and amortisation of $58.7m, up from $45.8m for the previous financial year.

Operating revenue was up to $1.22 billion in the year to June, from $1.13b in the 2013 year.

After factoring in last year's goodwill impairment, the $42.3m net profit was $27.6m ahead of the 2013 result. Cash from operating activities grew by $15.5m to $54.8m.

The firm on October 3 will pay a fully imputed dividend of 3.5 cents a share to shareholders registered at the record date of August 26.

This distribution comprises a final dividend of 2.5c a share and an additional special dividend component of 1c a share to recognise the strong cashflows. Added to the 2c a share half-year dividend, the total dividend for the full year is 5.5c a share.

Dewdney said PGW represented a leading option for investors looking for broad-based exposure to New Zealand agriculture, which had performed strongly in the past year. It was making headway on the commercialisation of agri-technologies to growing international markets.

"This year's strong financial result demonstrates the overall strength of the company," he said. "We have developed strategies to grow our business based around our clients' business needs. This financial result suggests those plans are on track."

PGW had recently undertaken a significant exercise to refresh the group strategic plan and management was challenging every business unit to grow market share, Dewdney said.

"This plan is now being implemented at both the PGW group and individual business-unit level," he said. "Our business-unit strategies provide clear direction on how we see the markets in which we operate, and how we are responding to capitalise on the opportunities available."

The company would outline the key elements of the plan to shareholders and the market in coming months.

Dewdney said the outlook for core sheep, beef, arable, horticulture and viticulture markets was positive, and would continue to be a major focus for the company.

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PGW would put more emphasis on the dairy, water and agronomy sectors in New Zealand.

"We also see potential to grow strongly in South America and our other international markets," he said.

PGW's balance sheet remained strong, and it had made strategic investments in Water Dynamics and AG Property Holdings during the year.

PGW chairman Alan Lai said the board continued to see significant improvements across all aspects of the company. The management team had been given a challenge to grow the business.

Lai announced Trevor Burt's appointment as deputy chairman.

He was "well placed to support the company from his Christchurch base", Lai said. Fairfax NZ

- The Press

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