PGG Wrightson profit continues to improve
Rural services company PGG Wrightson improved first half net profit to $4.8 million and resumed dividend payouts as it continued to recover.
PGG Wrightson generated strong cash flows from operating and investing activities during the six months to December 31, rising to $24.4m from $6m a year earlier.
The cashflow had helped the company halve its net debt position over the course of the last 12 months.
Managing director George Gould said the result followed a strong profit for the full year to June 30.
A year ago, PGG Wrightson moved back into the black with a first half net profit of $3.1m, compared with a loss of $5.9m a year earlier.
Gould credited the improvement to stronger operating earnings across all major businesses along with working capital efficiencies and collection of the Crafar Farms debt in December.
"The tougher conditions being faced by farmers clearly impact on some areas of our business, but overall our businesses have performed strongly and most have lifted earnings year-on-year," Gould said.
"We are especially pleased with the performance of our New Zealand seed, retail, wool and irrigation & pumping businesses - all of which showed sizeable gains."
Progress was being made in PGG Wrightson Rural Supplies and Fruitfed Supplies, both being retail businesses facing intense competition from farmer owned co-operatives, Gould said.
"Our job is to add value to our farmer clients, helping them make their farming businesses more profitable. If we do add value, there is worthwhile margin for us, and the track record shows we are achieving success on this front."
Tthe company's trading businesses such as livestock, grain and real estate were more susceptible to overall market conditions, but their underlying performance remained solid.
In livestock, stock tallies remained broadly in line with the previous year but the decline in sheep and deer values hurt earnings.
In the seeds business, investment in research and development continued to underpin the performance of the unit.
"We achieved outstanding growth in sales from the newly launched and (trademarked) CleanCrop Brassica system and continued to see strong growth from the AR37 range of rye-grass seeds.
"Confirmation last week of arrangements for the Primary Growth Partnership for Seed and Nutritional Technology Development were positive and will be valuable in further enhancing our R&D programmes."
Revenue for the retail business was not directly comparable to the previous year due to a move to transacting some categories as an agent rather than a principal. This did not impact on profit, but resulted in a $91.2mreduction in stated revenue.
The company today declared a fully imputed dividend of 2.2 cents per share, its first dividend for some time.
The interim dividend for shareholders registered at the record date of March 14 will be paid on March 28.
PGG Wrightson shares last traded at 41c.
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