PGG Wrightson posts higher profit despite adverse weather

PGG Wrightson's livestock business delivered a record operating earnings before tax as strong international demand for ...
DAVID UNWIN/STUFF

PGG Wrightson's livestock business delivered a record operating earnings before tax as strong international demand for protein and lower stock numbers combined to push up prices.

Overall revenues were down but PGG Wrightson (PGW) posted an after-tax profit of $46.3 million for the 2016-17 financial year, up from $43.8m the year before.

The positive result for the agricultural services team was helped along by lower interest costs and $26.8m from the sale of non-strategic assets.

Chief executive Mark Dewdney described the result as a "great result" after difficult weather conditions during the year. At one stage the company was tracking ahead of forecasts until two cyclones in autumn hit final quarter earnings, taking out about $5m from its various businesses.

PGG Wrightson CEO Mark Dewdney.

PGG Wrightson CEO Mark Dewdney.

Revenues came to $1.13 billion compared to $1.18b the year before. The company declared a fully imputed dividend of 2c per share to bring the total dividends paid for the year to 3.75c per share.

READ MORE: PGG Wrightson profit lifts in tough year

Livestock, real estate, insurance and retail performed well, but the company does not release the exact details of each business within the divisions of agency, retail and water, and seed and grain.

There was a continued reduction in demand for irrigation projects. Dewdney said the water division recorded a loss, and while irrigation was "in recovery", it was back on the level of 3-4 years ago.

The wool procurement and brokering business had a particularly difficult year as prices for crossbreed product collapsed. On the plus side the wool export business increased its profitability.

In New Zealand the seed and grain division was adversely impacted by the autumn cyclones, but the South American arm of the division bounced back from the previous year's result.

Net cash flow from operating activities reduced $14.7m to $20.5m. Net interest-bearing debt increased by $1.7m to $128.2m.

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Dewdney forecast earnings would be higher in 2017-18 but after-tax profit lower than in the last two years.

 - Stuff

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