Friday, March 29, 2024

Uruguay floods dampen PGW profit prospect

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PGG Wrightson’s hope for second half earnings recovery in Uruguay appear to have been washed away by heavy autumn rain.
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The company said its earlier forecast of group operating earnings of between $61 million and $67m for the year ending June 30 now looked likely to trend towards the lower end of the range.

Floods in Uruguay struck at the group’s seed cleaning site near Rosario, though staff did what they could to move seed and processing plant to higher ground, managing director Mark Dewdney told the NZX.

The warning had little immediate impact on the share price, with PGW off just 0.5c to 40.5c on the NZX.

An initial assessment was that physical damage would not have a material impact on earnings, though further work on that was still to be done.

A greater issue would be the flood impact on the summer crops, autumn re-grassing and the farming sector generally.

Soya bean crop yields would be affected and sorghum grain crops were also showing signs of pre-germination symptoms.

The Uruguay business had a challenging first half of the year up to December 31, cutting into overall group profits for the period.

A better second half, based on pastoral sector earnings and especially good beef prices was expected but Dewdney was now not expecting a full recovery in the current financial year.

A further update on the earnings impact would be made in the autumn, he said.

The NZ and Australian businesses were continuing to perform well, with the exception of the PGW Water business which was getting less work because the downturn in dairying had slowed the rate of dairy conversions and system upgrades.

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