Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

PGG Wrightson posts 19% drop in first-half profit

PGG Wrightson posts 19% drop in first-half profit as farmers tighten spending

By Tina Morrison

Feb. 24 (BusinessDesk) - PGG Wrightson posted a 19 percent drop in first-half profit as low dairy prices and fear of an El Nino drought contracted farmer spending at the rural services firm.

Profit fell to $16.1 million, or 2.1 cents a share, in the six months ended Dec. 31, from $19.7 million, or 2.6 cents, in the year earlier period, the Christchurch-based firm said in a statement. Revenue declined 4.8 percent to $623 million, while the cost of sales slid 6.9 percent to $462 million.

Farmers have tightened their wallets after milk processors like Fonterra Cooperative Group, the country's largest, cut their farmgate milk payouts below the cost of production as a global oversupply lasts longer than anticipated. Fears of an El Nino drought heading into summer also kept farmers cautious with their spending.

"Low dairy prices, and the perceived risk of drought from El Nino conditions led to more conservative spending from PGW's farming customers in New Zealand," said chief executive Mark Dewdney.

Wrightson said tough market conditions may mean its its full-year earnings will be pushed towards the lower end of its forecast range of $61 million to $67 million in operating earnings before interest, tax, depreciation and amortisation.

"While the sentiment in the dairy and sheep meat sector has deteriorated over the last three months, there is strong confidence in the horticulture-based sectors that will provide further opportunities for growth," Dewdney said.

Fears of widespread drought had receded following regular rainfall since the start of the year, although the company's livestock business will probably be hit by lower trading volumes in the second half of the year after fear of dry conditions prompted sheep farmers to process more of their animals in the first half, Dewdney said.

"Falling commodity prices have replaced El Nino at the top of the list of things attracting attention," he said. "Although commodity price movements have been mixed, the outlook for dairy prices in particular remains extremely challenging."

In the first half, profit at Wrightson's rural services unit slid 14 percent to $19.8 million as revenue declined 4.3 percent to $449.8 million.

Within the rural services unit, retail profit edged up 0.2 percent to $17.1 million even as revenue slipped 2.4 percent to $306.6 million as horticulture and its fruitfed businesses improved. However the livestock unit turned to a loss of $322,000 from a profit of $2.3 million in the year earlier period as revenue dropped 27 percent to $30.3 million due to a lack of live cattle exports. Domestically, higher cattle and sheep tallies offset a decline in sheep prices and dairy volumes, it said.

In the company's other main unit, the seed and grain business which operates in New Zealand, Australia and South America, profit slumped 30 percent to $3.7 million as revenue dropped 8.8 percent to $167.5 million.

"Our South American business has experienced a challenging start to the year with some very wet weather and falling soybean prices reducing demand for seed and ag chemicals," Dewdney said. "This was however offset by another strong result from our New Zealand seed business."

Wrightson will pay a dividend of 1.75 cents per share on April 5, down from a payment of 2 cents in the year earlier period.

Its shares dropped 1.2 percent to 41 cents. The stock is rated a 'hold' according to the average of three analyst recommendations compiled by Reuters.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

National: National Backs Businesses With $10k JobStart

National will provide a $10,000 cash payment to businesses that hire additional staff as part of our commitment to keeping New Zealanders in jobs, National Party Leader Todd Muller and Finance spokesperson Paul Goldsmith have announced. Our JobStart ... More>>

ALSO:

DIY Law: Government Exempts Some Home Improvements From Costly Consents

Homeowners, builders and DIYers will soon have an easier time making basic home improvements as the Government scraps the need for consents for low-risk building work such as sleep-outs, sheds and carports – allowing the construction sector ... More>>

ALSO:

Media Awards: The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards

The New Zealand Herald has been labelled a “powerhouse news operation” as it claims the two biggest prizes – Newspaper of the Year and Website of the Year – along with many individual awards at the 2020 Voyager Media Awards Website of the ... More>>

ALSO:

ASB Bank: ASB Takes The Lead Again With New Low Home Loan Interest Rate

ASB has moved again to support its customers, cutting a number of home loan rates, including the two-year special rate to a new low of 2.69% p.a. Craig Sims, ASB executive general manager Retail Banking says the reduced rate will be welcome news for many ... More>>

ALSO:

Nathan Hoturoa Gray: The Problems With Testing And Case Statistics For Covid-19

To begin to understand disease transmission in a country requires adequate testing of your population with properly vetted, accurate tests. As the world struggles to find what 'adequate percentage' of the population is necessary, (estimates predict ... More>>

ALSO:

RNZ: Fletcher Building To Lay Off 1000 Staff In New Zealand

The construction company will cut around 10 percent of its workforce as it struggles with the fallout from Covid-19. More>>

ALSO:

Can Pay, Won't Pay: Cashflow Moves Urged

Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses. More>>

ALSO:

Gordon Campbell: On Why We Should Legally Protect The Right To Work From Home

For understandable reasons, the media messaging around Level Two has been all about “freedom” and “celebration”, but this is not necessarily going to be a universal experience. When it comes to workplace relations, Level Two is just as likely to ... More>>

ALSO:



Auckland Airport: Thousands Of Kiwis Travelling For Queen’s Birthday Weekend


Confidence in domestic travel is beginning to steadily ramp up, with thousands of Kiwis travelling within New Zealand for Queen’s Birthday.
Nearly 400 flights will be operating to and from Auckland Airport over the long weekend... More>>

ALSO:

Science Media Centre: Understanding 5G Concerns – Expert Q&A


Recent attacks on cell phone towers have brought concerns over the rollout of 5G technology into sharp relief.
While scientific research has consistently shown that the technology does not adversely affect human health, public concerns about its impact have spread around the world, fueled in part by growing misinformation online. The SMC asked experts to comment... More>>

ALSO:


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>

ALSO:


Media Blues: Stuff Chief Executive Buys Company For $1

Stuff chief executive Sinead Boucher has purchased Stuff from its Australian owners Nine Entertainment for $1.
The chief executive was returning the company to New Zealand ownership, with the sale is expected to be completed by 31 May.
"Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders," Boucher said in a statement.... More>>

ALSO:

RNZ: Bar Reopening Night 'much, Much Quieter'

Pubs and bars are reporting a sluggish first day back after the lockdown, with the fear of going out, or perhaps the joy of staying home, thought to be a reason for the low numbers. More>>

ALSO:

Stats NZ: New Zealand’s Population Passes 5 Million

New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today. More>>

NIWA: Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist

Seven weeks of lockdown has provided evidence of how pollution can vanish overnight with benefits for the environment and individuals, says NIWA air quality scientist Dr Ian Longley. Dr Longley has been monitoring air quality in Auckland, Wellington ... More>>

ALSO:

Government: Milestone In Cash Flow Support To SMEs

A significant package of tax reforms will be pushed through all stages in Parliament today to throw a cash flow lifeline to small businesses. More>>

ALSO: