27 Feb 2019

PGG Wrightson posts $320k first half profit

10:31 am on 27 February 2019

Rural services company PGG Wrightson's first half profit has all but disappeared as it faced higher costs and a large loss from a business it's now selling.

PGG Wrightson

PGG Wrightson posted a half year net profit of just $320,000 compared to $14.6m the year before. Photo: Facebook / PGG Wrightson

The company made a profit of just $320,000 compared with a profit of $14.6m the year before.

The latest result included a loss of $8.6m in its seed and grain business which is being sold.

Operating earnings fell by nearly a quarter to $17.8m as it had higher labour costs and overheads, and faced softer overall trading with wet weather affecting sales, particularly in wool and real estate.

"The factors impacting performance have been felt across the rural sector and we have confidence that we have held, and in some cases grown, our market share," chief executive Ian Glasson said.

The company is close to completing the sale of its seeds and grain business to Danish firm DLF Seeds for $434m, which PGG Wrightson expects to result in a net gain of $210m which will inflate the full year result. The company is working how to return the sale proceeds to shareholders.

Mr Glasson said it was looking to some pent up demand from farmers given the weather effect on farming, and strong prices for meat which are underpinning farm profits.

However, he cautioned that international trade disputes, Brexit, the M bovis cattle disease impact, and soft farmer confidence might weigh on spending.

"On balance we are cautious for the remainder of the year. Weather and commodity prices will continue to be risk factors for the business, particularly during the months of May and June, which are important contributors to the earnings of our livestock business," he said.