PGW’s previous June financial year was hit by soft export demand for sheep meat, which saw the company’s revenues drop for the first time since 2018.
The company’s shares rallied sharply on the profit announcement.
By late morning, PGW was the market’s top performer, gaining 13c or 5.3% to $2.59.
Chairman Garry Moore said the agri-sector continued to recover.
“We have seen a shift in key markets and have been able to respond positively to that turnaround,” Moore said.
“While the operating environment over the year was more challenging in the retail space, we are pleased to see the business continue to consolidate and grow market share,” Moore said.
PGW’s retail and water group revenue was up $39.4m on the prior year.
Moore said constrained supply for livestock and increased international demand drove up red meat and dairy commodity prices over the year.
“This has had a positive influence on the profitability of farming operations and has led to a shift in sentiment,” he said.
“Rural real estate responded to improved confidence in the dairy and the red meat sectors, with activity supported by easing interest rates.”
The July Federated Farmers’ Confidence Survey confirmed farmer sentiment is at its highest levels in eight years.
“Farm profitability has rebounded, strengthening investment spending and production output expectations,” Moore said.
Chief executive Stephen Guerin said PGW’s rural supplies business performed solidly, as sentiment in the farming sector improved.
Dairy, sheep and beef farmers all enjoyed increased returns.
“While sales revenue improved on the prior year, farmers took a generally conservative approach with many using the good returns to reduce debt,” he said.
Fertiliser and stock food were in demand, as farmers focused on increasing production to maximise higher commodity returns.
There was additional spending on capital items, such as fencing, in the latter half.
However, the arable sector was more challenging with reduced demand for seed crops and grower returns being challenged, he said.
PGW’s horticultural service and supply business, Fruitfed Supplies, faced challenging trading during but maintained its strong market position.
“Encouragingly, we have seen renewed optimism in both the kiwifruit and apple sectors,” Guerin said.
Looking ahead, Moore said easing inflation and interest rates, together with greater stability in input prices, have created a more positive operating environment.
“These factors have contributed to a noticeable lift in farmer confidence which is expected to be positive for our rural servicing operations.
“Some uncertainty and a challenging operating environment is evident in arable farming, viticulture and strong wool,” Moore said.
Ongoing geopolitical tensions and unpredictable international trade terms also add to the uncertainty.
While dairy and red meat markets remain resilient, caution and debt reduction continue to influence some primary subsectors.
“Strong commodity prices are expected to remain throughout FY26 across dairy, red meat and horticulture crops, particularly kiwifruit and apples.”
Confidence in the rural real estate market was expected to persist, with quality listings continuing to attract interest and increased farm sales, Moore added.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
