A focus on cash flow and debt reduction may have transformed PGG Wrightson's accounts for the financial year, but continued global economic uncertainty has prompted management to take a conservative outlook.
Releasing the rural servicing company's annual accounts yesterday, managing director Tim Miles said should trading conditions for the 2010-11 year be similar to last year, so should its performance although repaying $207 million in debt would reduce interest costs.
Because of that uncertainty, there would be no end-of-year dividend, but Mr Miles said that policy would be reviewed at the half-year result.
PGG Wrightson's annual result for the year to June 30 was in line with expectations and described by Mr Miles as satisfactory given a year when farmers watched their spending and its FruitFed, Irrigation and Pumping and Real Estate divisions found the going tough.
Earning before interest, tax, depreciation and amortisation (Ebitda) was $70.5 million, 13% lower than the $81.1 million for the previous year, and the net profit after tax was $23.3 million, included a $2 million tax allowance for building depreciation, ($66.4 million loss a year earlier).
Net debt, excluding PGG Finance debt, fell from $413 millon in the 2008-09 year to $187 million, but this was still $51 million higher than forecast by the Prospective Financial Information earlier this year, the difference due to inventory.
Revenue for the year under review was 10% lower at $1.151 billion ($1.280 billion), with the biggest reductions coming from Agrifeeds, merchandise, real estate and Irrigation and Pumping which were all hit hard by lower spending.
FruitFed was hit hard by the viticulture slowdown, with almost all its $35 million reduction in revenue from that sector, while lower fertiliser sales provided a $30 million hit.
Earnings were boosted by improved performances from seeds and grain, its South American business, livestock and insurance.
PGG Wrightson Finance held its revenue at about $60 million but lifted its Ebitda from $10.9 million to $13.3 million.
An allowance of $11 million has been made for bad or doubtful debts.
Chairman Sir John Anderson said the year was highlighted by the successful recapitalisation of the business.
