PGG Wrightson expects FY19 operating earnings to match prior year's record
By Rebecca Howard
Oct. 11 (BusinessDesk) - PGG Wrightson expects full-year operating earnings to be on par with last year's record, including earnings from the seed and grain business that it is selling to Danish cooperative DLF Seeds
The company said it expects its operating earnings before interest, tax, depreciation and amortisation to June 30, will be approximately $70 million. In August, it said its operating ebitda was a record $70.2 million in the year ended June.
"We are optimistic about the prospects for our trading performance for the year ahead and we have confidence that we can match last year’s performance at an operating ebitda level. It is early days, as the first quarter is traditionally a quiet trading period and we have seen a late start to spring, however, activity has picked up across the business during October," chief executive Ian Glasson said in a statement to the stock exchange.
PGG Wrightson did not provide a forecast stripping out the sale of the seed and grain business. It agreed in August to sell the operation to DLF for $421 million in cash and $18 million of debt repayment. The deal is subject to several conditions, including shareholder and Commerce Commission approval.
Nor did it provide a net profit forecast. It reiterated that a successful sale of the seed and grain business would deliver a "net capital gain of more than $120 million which would flow through NPAT."
Regarding its other business, it said it expects a slightly improved operating ebitda from the retail and water group. It also expects the livestock and wool business to perform well. It did note, however, that New Zealand’s rural real estate market has softened since mid-2017 which has made trading conditions difficult for the real estate business.
It said it is making good progress on a strategic review and will provide the board's recommendation for the sale of the seed and grain business and an independent appraisal report from KordaMentha to shareholders ahead of the Oct. 30 meeting and vote.
The stock fell 4.8 percent to 59 cents in a day when stocks across the bourse were battered. The announcement came out after the close of trading.