Trading is expected to be more favourable in the second half, which brings in most of the earnings, and after some difficult conditions for much of the agri-sector in recent years, PGW finally expected to have the “wind at our backs’’ in the 2018 year, chief executive Mark Dewdney said.
Operating earnings (Ebitda) for the six months to December 31 were $26 million, down from nearly $31m a year earlier. However, the after tax figure was close to last year, at $16m.
The result was pleasing given the market conditions, chairman Alan Lai said.
Dewdney said the group had traded consistently through tough conditions and believed it was outperforming the market.
Low dairy prices, lower milk and red meat production, tough wool trading conditions, and a wet start to spring led to cautious spending by farmers, resulting in a 2.5% fall in revenue, to $607.7m from $623m previously.
The Water business was affected by slower irrigation development, and Wool also had softer earnings.
The reduced dairy spend also reduced earnings in the New Zealand Seed business, although elsewhere in the Seed and Grains group, Uruguay had a good start to the year and Australian business was steady. Uruguay was making a good recovery from serious floods last year.
In NZ, early signals were that the latest recovery in dairy prices would lead to increased regrassing and autumn seed spend.
Also on the positive side, Retail increased operating earnings by $2m over a year earlier, with improved margins, with the Fruitfed horticulture supply business again very strong, and Rural Supplies and Agritrade also contributing despite weather challenges and sector competition.
Livestock earnings were steady with the same period a year earlier, despite lower stock numbers.
Higher prices in the store market for sheep offset lower volumes. Most of the Livestock earnings are in the second half, and changes in prices and volumes could affect earnings, Dewdney said.
Directors expects steady operating earnings (about $39m last year) in the second half, which would put Ebitda in the middle of the reaffirmed earnings guidance from last year’s annual meeting, of a range between $62m and $68m.
However, with a number of one-off gains (including $5m from a large property sale just settled), the after tax profit this year is expected to be in the $46m to $51 range, well up on the $39.5m last year.
An operating cash outflow of $16.9m was recorded for the half year, compared with a $12.1m outflow a year earlier.
At balance date, PGW had total assets of $748m, down from $754m a year earlier, with equity slightly higher at $276m from $272m.
A fully-imputed interim dividend of 1.75c a share will be paid on April 4, the same as last year. Earnings a share were 2.1c.
