PGG Wrightson expects profit lift, sees regular dividends

PGG Wrightson's auctioneer Matt Rorck achieves $10 over the average price of $111.50/head for these S7H Lewis Cryptorchid stores. Photo / File

Rural services firm PGG Wrightson said it was well-placed to deliver a 30 per cent lift in operating earnings in the current financial year, and that it intended to pay regular dividends.

Chairman Rodger Finlay said that although a decision on the interim dividend would not be made until the company's half-year results in February, the board's expectation was that an interim dividend of not less than 8 cents per share would be paid.

Finlay said in notes today's annual meeting that while it was too soon to provide firm guidance about expectations for 2021, given the uncertainty posed by the Covid-19 pandemic for global markets, the board nevertheless expected a lift in earnings.

"Based on our current assessment, the board considers that PGG Wrightson is well-placed to deliver an operating EBITDA result of around $52 million, or around $30m excluding the impact of the lease accounting standard IFRS16," Finlay said.

A result at this level would represent a 15 per cent improvement on the prior year on a NZIFRS 16 inclusive basis, or a 30 per cent improvement excluding the accounting standard.

Shares in PGG Wrightson rallied by 6c or 2 per cent to $3 in morning trading, the stock having gained 49 cents or 19 per cent over the past 12 months.

Finlay said there had been a pleasing start over the first quarter with the business trading well and in line with expectations.

"We are seeing good demand in our Rural Supplies and Fruitfed Supplies retail businesses over the early spring period.

"Livestock trading volumes have been sound with saleyards throughput bouncing back post the Covid-19 related closures and increased meat processing capacity."

There had also been a recent uptick in the rural and lifestyle real estate sectors with increased buyer interest but Finlay said the wool market remained challenging.