18 Apr 2024

PGW cuts earnings forecast by $7m

12:22 pm on 18 April 2024
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Drought, low demand, high interest rates and costs have taken a toll on the business. Photo: 123RF

Weaker agricultural market conditions have forced rural services company PGG Wrightson (PGW) to cut its full-year earnings forecast.

The company is now expecting operating earnings of about $43 million compared to its previous forecast of $50m for the year ended June.

PGW chair Garry Moore said trading conditions had deteriorated for a range of reasons but the result had been a reduction in spending.

He said drought in several regions, low sheep meat demand and higher supply, high interest rates and costs, and delays between sales and income for producers had taken a toll.

"Whilst we have seen a slight uptick in farmer and grower confidence in recent months, this is off a low base and sentiment in the sector remains subdued."

"We are seeing some clients defer spend where they can and hold off on discretionary items. In this context PGW's outlook for the remainder of the financial year remains cautious."

Moore said the medium and long-term prospects for the sector and the company remained positive.

"As a business, PGW does well when our clients prosper and consequently the converse is true that when times are tough for our clients this also impacts our performance.

"Notwithstanding the difficult trading conditions, PGW continues to maintain and grow share in the markets in which we operate."

In February the company reported a near halving of its six-month profit and suspended its dividend to preserve cash.

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