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PGG Wrightson profit stalls

NZ Newswire logoNZ Newswire 20/02/2017 Jonathan Underhill

PGG Wrightson's profit growth stalled in the first half, which the rural services company blamed on low prices for dairy and wool and reduced production of red meat which made farmers more cautious about spending.

Profit fell to $16 million in the six months ended December 31, from $16.07m a year earlier, the Christchurch-based company said on Tuesday.

Sales declined to $608m from $623m.

Sales and earnings fell at both the rural services and the smaller seed & grain division in the first half but the company said it was more upbeat for the second half of the year.

It reiterated its guidance for full-year operating earnings before interest, tax, depreciation and amortisation of $62m to $68m while raising its forecast for net profit to reflect anticipated one-time gains such as from property sales.

Flat earnings are an improvement on the year-earlier result, when profit fell 19 per cent.

"Low dairy prices, reduced production of both dairy and red meat, tough wool trading conditions, and a wet start to spring led to cautious spending from New Zealand's farming customers during the six months," said chief executive Mark Dewdney.

The company will pay an unchanged interim dividend of 1.75 cents a share.

First-half revenue from rural services declined to $437m from $499.8m and operating ebitda dropped to $29m from $32.8m.

Within the rural services division, retail revenue rose 4 per cent to $318.9m and ebitda gained 8 per cent to $26.8m, while livestock revenue fell 11 per cent to $27m and earnings slipped 0.8 per cent to $2.6m.

Wrightson shares last traded at 54 cents and have gained 29 per cent in the past 12 months, outpacing the S&P/NZX 50 Index's 16 per cent gain.

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