Heartland operators doing well

By LIAM DANN AND AGENCIES

The good news from the pastoral sector kept coming yesterday with strong annual results from two listed rural services companies - Pyne Gould Guinness and Allied Farmers.

Christchurch-based Pyne Gould Guinness posted a $13.9 million net profit - excluding one-off costs - for the year to June 30, a result 15.8 per cent up on the previous year's $12 million.

Chairman Bill Baylis said the result was "particularly pleasing" in a year that featured a severe drought in the South Island, a poor Canterbury harvest and a strong currency, relative to the United States dollar.

Chief executive Hugh Martyn said seven of the company's eight operating divisions recorded year-on-year increases.

The exception was the seeds business, where sales were affected by the Australian drought.

The insurance business recorded its sixth consecutive increase, the real estate business had a near record year and the wool unit lifted its contribution, despite difficult market conditions.

Including the one-offs - capital gains from property sales and the costs from setting up the New Zealand Wool Handlers joint venture - the net profit was $18 million.

A final dividend of 5c per share and a special 3c per share dividend follow the interim of 4c, making a total of 12c per share, against 8.5c per share previously.

Taranaki-based rural services company Allied Farmers posted a June year net profit after tax of $2.9 million, up 35.8 per cent.

The company's final dividend of an imputed 5c per share will be paid on October 1.

The result came on total revenue of $74.7 million, compared with $70.3 million previously. Its operating surplus before tax was $4.4 million, up from $3.2 million.

Chairman Brian Train said the group's rural services division recorded a 60 per cent increase in net profit. "Real estate provided satisfactory revenues, which have emanated from a buoyant property market and an increased market share," he said.

Live cattle sales to China provided the company with income from that market for the first time, he said.

Merchandise revenues were steady and Allied Farmers Finance and Allied Farmers Wools increased their contributions.

Looking ahead, the current year was in line with budget, but the high value of the dollar was "negating to some degree the very good values for commodities currently being paid on the overseas markets".

* The rural news doesn't look so good across the Tasman where an extra A$330 million might be needed to bail out drought-stricken farmers.

The Australian newspaper reported that Treasurer Peter Costello had also warned that rising oil prices further threatened the rural economy, with winter crops in Queensland and western New South Wales already facing failure because of poor rains.

Income assistance for 35 drought-declared areas is due to finish by the end of the year, but many farms would need another year of help.