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Farmer holds PGG Wrightson book - Source: ONE News -
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New Zealand's largest listed rural services company PGG Wrightson has reported a return to profit but warns that a weak farmer sector has hit sales.
The company made a net profit of $4.1 million to the six months to the end of December, compared with a loss of $32.8 million for the same period a year earlier, which contained a large level of one-off charges related to investments.
It says it will not pay an interim dividend compared with last year's 5 cents.
PGG Wrightson says weakness in the farming sector has hit its trading performance with sales down 20.6% on the previous year.
Earnings before EBITDA were $24.9 million from $45.1 million a year before.
It says farming activity has picked up and current trading is broadly consistent with guidance it gave in November for a full year profit of about $24 million.
In December the company announced it had repaid $200 million in debt from the proceeds of an issue in new shares and in October it sold a 13% stake to China-based Agria Corp, raising $36 million.
The company has also announced a shake-up that will see TVNZ Chairman Sir John Anderson join the PGG board and become its new chair.
The current chair Kevin Smith will remain on the board, however Craig Norgate and Baird McConnon will step down, with the board size to be reduced by one to 10.
Market analyst Greg Easton from Craigs Investment Partners says the moving on of Norgate is no real surprise.
"He's the one more or less wearing the blame for the poor
performance over the last couple of years," he says.
"Sir John Anderson ran National Bank for a long time up until the
merger with ANZ, he's very widely respected in the business
community."
Easton also says the company's profit news is reassuring, but it is not out of the woods yet.
"The real estate division is struggling and the fruit fed business, which services the viticulture and horticulture business, is finding it quite tough," he says.
"But the core business of seeds, livestock looks to be going OK. I think this quarter we could see some quite improved numbers in livestock in particular as things dry out."
