Friday, March 29, 2024

PGW earnings up 33%

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PGG Wrightson has ridden the back of strong farm gate returns, with earnings before interest, tax, depreciation and amortisation (ebitda) up a third to $56 million for the year to June 2021. That’s up on the “retrospective” restated ebitda of $42.2m for the 2020 financial year, on the strength of performances across its retail, livestock, wool, real estate and Fruitfed horticultural supply businesses. Revenues climbed by 7.6% to $847.8m.
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PGG Wrightson has ridden the back of strong farm gate returns, with earnings before interest, tax, depreciation and amortisation (ebitda) up a third to $56 million for the year to June 2021.

That’s up on the “retrospective” restated ebitda of $42.2m for the 2020 financial year, on the strength of performances across its retail, livestock, wool, real estate and Fruitfed horticultural supply businesses. Revenues climbed by 7.6% to $847.8m.

A $15m jump in net profit to $22.7m will see the listed rural services group pay a final dividend of 16 cents a share, following an interim dividend of 12c declared in February.

Chief executive Stephen Guerin says the firm’s rural supplies and Fruitfed supplies businesses had both traded well, helping push the retail and water businesses’ ebitda by 13%, or $4.3m to $37.5m. 

Guerin says PGW hadn’t been immune to the impacts of covid-related supply chain disruption, which had an impact on sourcing product and grower inputs and was now trying to lock in seasonal requirements for customers “three to six months earlier than normal”.

The firm’s wholesale subsidiary, Agritrade, had struggled to maintain inventory and the water business, which provided irrigation packages to farmers, suffered from shipping delays.

Fruitfed had done well on the strength of its pip fruit, stone fruit and kiwifruit business, and grew across the avocado and cherry sectors.

Guerin says the company’s agency businesses, which include livestock, wool and real estate, had contributed a combined ebitda of $25.2m, a 60% improvement on the $9.5m recorded in the previous financial year.

Livestock returns were driven largely by beef and sheep values, particularly on the South Island, as well as higher dairy payouts. A positive velvet season also helped returns from deer, serving to offset lower venison prices.

As with the real estate sector as a whole, the firm benefited from strong lifestyle and commercial farm sales, which Guerin says had largely been fueled by low interest rates.

He says agents were now seeing early signs of a positive spring for rural sales, with higher than normal appraisals taking place along with earlier spring listings.

“With strong commodity values in rural, we anticipate a number of retirement and succession listings coming to the market,” he said.

The impacts of covid had also seen a number of projects put on the backburner, which saw capital expenditure decrease by $2.3m to $6.8m. 

At the same time, net interest bearing debt was at $6.5m at June 30, which is the lowest recorded level in over a decade, excluding late 2019 when it was holding the proceeds of the sale of the seeds business.

Chair Roger Finlay says the outlook for the sector remained positive, although geo-political risks and the emergence of new covid variants were sources of uncertainty.

“Implications from the pandemic will continue to impact consumer markets and the global supply chain,” Finlay says.

He says the company would expect to provide guidance for the current financial year at its annual shareholders meeting on October 19.

BusinessDesk

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