PGG Wrightson profit roars back after Covid-19 downturn

Rural services group PGG Wrightson has just posted its annual result. Photo / File

Rural services group PGG Wrightson (PGW) has reported a 33 per cent lift in its annual operating result, based on solid performances across its businesses after the Covid-19 disruptions of the previous year.

The financial year started and finished strongly with year-end operating EBITDA at $56.0m, up $13.8m on last year's outcome.

The result was in line with the company's own guidance.

Revenue came to $847.8m up $59.8m or 7.6 per cent, and the net profit after tax was $22.7m, up $15.0m.

"These results further vindicate the decisions taken over the last two years in divesting the seeds business and with the concomitant recalibration of our cost base and systems," the company said.

PGG Wrightson said in July that it expected its annual operating EBITDA to be around $56m following a strong trading performance over the second half of the financial year.

The 16cc final dividend brought the total fully imputed dividends paid for the year to 28c.

PGW did not pay a final dividend in 2020 but the company issued a 9c interim dividend of 9c in March of that year.

In 2018, PGW sold its seeds business to Danish company DLF Seeds for $421m, resulting in a $234m distribution to shareholders in the following year.

PGW said its strong balance sheet meant it could look at growth ambitions, both internal and external.

Chief executive Stephen Guerin said the company's retail and water business turned in operating EBITDA of $37.5m, up $4.3m on the prior year's result.

PGW's rural supplies and Fruitfed supplies businesses also traded strongly.

The company's agency group, which incorporates the livestock, wool and real estate businesses, reported operating EBITDA of $25.2m, up $9.5m on the prior year's result.

"Our livestock business has maintained market share throughout the country with the South Island achieving a very solid result, especially within the sheep and beef sector," Guerin said.

The real estate business had seen particularly strong demand across all sectors of the rural property market, fuelled by low interest rates.

PGW's capital expenditure of $6.8m was $2.3m lower than 2020 and was impacted by a slowing in the implementation of projects as a consequence of Covid-19 related disruption.

Net interest-bearing debt was about $6.5m as at June 30 and was the lowest recorded in over a decade, excluding June 30 2019 when the proceeds from the sale of its seeds business were held.

"The outlook is positive in the rural sector with strong farm gate and commodity prices," chairman Rodger Finlay said.

Robust demand is expected to continue for lamb and sheep meat and cattle prices are anticipated to remain high. There is also confidence in dairy with a positive outlook into next year and a solid pay-out predicted," he said.

The company's shares last traded at $3.79, up 12c on Monday's close.