PGG Wrightson, the New Zealand agribusiness icon, broke with
its patchy recent history by unveiling a profits upgrade, boosted by a strong performance
by its cattle trading business.
The farm retail and trading group, controlled by China-based
seeds group Agria Corp, lifted to NZ$56m-58m, from NZ$52m-56m, its forecast for
earnings before interest, taxation, depreciation and amortisation (ebitda) for
the year to the end of June.
The upgrade, while small, contrasted with the group's troubled
performance since 2009, since when, amid a battle to lower its debts, it has unveiled
only two years in profit.
And these profits, of a combined NZ$41m, were dwarfed by the
loss of NZ$305m reported for last year, down to a writedown of goodwill from
the group's formation in 2005 from a tie-up of Wrightson and Pyne Gould
closes on a high
However, the group's trading performance "has held up rather
well" since January, said Mark Dewdney, appointed chief executive in July, a resilience which defied "some
"The upper North Island saw another summer drought develop
with farmers looking for rains to come mid-April," Mr Dewdney said.
"Just as this happened, we also experienced a tough spell in
the South with very wet and cold weather conditions challenging arable
production and winter sowing activities."
However, earnings were boosted by a strong close to New
Zealand's livestock and dairy season last month, which meant the closure of forward
herd sales contracts and, and brought the PGG Wrightson livestock business a
"Driving this was the large quantum of dairy forward sales
transacted in May, along with the increasing values in sheep and beef, and
higher-than-forecasted auction cattle volumes yarded."
The improvements at PGG Wrightson were underlined by the
group's decision to repurchase for NZ$30m a portfolio of properties sold, under
a leaseback agreement, by the group shortly after the 2005 merger.
"The decision to sell the properties was made at a different
point in time, and the company now has a completely different look to its balance
sheet," Mr Dewdney said.
The purchase of the 40 properties, including retail stores,
seed processing sites and livestock saleyards "across New Zealand" offers PGG
Wrightson "the opportunity to re-shape our property portfolio," he added.
The group is to undertake a strategic review of its "property
needs", which may see some of the repurchased assets sold-off.
Shares in Agria, which are listed in New York, rose 3.8% to
$1.38 in morning deals.