PGG Wrightson's half-year accounts have taken a hit from a slow start to the financial year and the effect of several one-off items.
The listed rural servicing company yesterday reported earnings before interest, tax, depreciation and amortisation (ebitda) of $16.8 million in the six months to December 31, compared with $25 million for the previous corresponding period (pcp).
Net profit after tax was a loss of $5.9 million, compared with a profit of $4.3 million pcp, while revenue from ordinary activities was up 10.7% at $646 million.
Forsyth Barr investment adviser Peter Young said the result was in line with forecasts and reflected the effect of one-off items, including a property impairment in Brazil and restructuring.
He saw the outlook as stable but not yet good.
PGG Wrightson's (PGGW) newly appointed managing director, George Gould, said while losses were unacceptable, one-off items had had an effect, as had seasonal issues.
PGGW typically made most of its money in the second half of the financial year, and that would be no different this year, he said.
The balance sheet had been strengthened by $19.7 million, proceeds from Olam International's takeover of New Zealand Farming Systems Uruguay (NZFSU), and $25.5 million from the settlement of PGGW's performance and management agreement with NZFSU.
The aim in the coming year was to strengthen the balance sheet further by focusing on the core fundamentals of the business and working-capital efficiencies, Mr Gould said.
PGGW AgriTech had a slow start to spring trading, but ended the half-year period with favourable sales of grain thanks to strong commodity prices and demand for seed cereals, maize and wheat, he said.
Subsidiary Agri-feeds benefited from greater demand as milk prices rose, but also from farmers' needing supplementary feed because of the dry spring.
Rural Supplies held its own, while Fruitfed Supplies had a strong finish to the period under review.
Also, greater livestock volumes were handled, including an export shipment to Vietnam.
The higher milk price boosted revenue from its irrigation and pumping division as more installations were contracted.
PGGW Finance continued to "demonstrate good fundamentals" with strong reinvestment rates, Mr Gould said.
Rural property activity started to lift later in 2010, and conditional sales were more than 25% above the corresponding period in 2009, although they were taking longer to settle, he said.
The PGGW board has confirmed its full-year guidance of operating ebitda of between $58 million and $61 million.
