Wrightson joins the slide

Wrightson has been punished for joining the growing list of corporates to cut their profit forecasts.

Shares in the rural services company took a battering yesterday as it dropped its full-year net profit forecast from $25.5 million to $18 million.

Brokers - who were not surprised by the writedown - said Wrightson had copped a stronger investor backlash than it deserved because of the negative sentiment surrounding the sharemarket this week.

The market lost more than $1 billion on Monday as sharemarkets round the world plunged.

Wrightson shares fell 11c yesterday to $1.50 before bouncing back to close down 7c for the day.

Wrightson said it expected earnings from continuing operations to be $16.2 million rather than the $18 million predicted in December.

Finance and operations general manager Mike Sang said that was largely driven by difficult weather. A wet December had slowed stock sales and hit the first-half result.

The company had hoped to make up that lost ground in the late summer and autumn, but dry conditions in Australia had hit profits in the seeds division, making it impossible to catch up.

"The underlying result is still up on last year," Sang said. "We have said we will beat that and we will."

Wrightson had a net profit of $10.3 million last year.

This year's net profit has been further hit by one-off costs, including a loss on the sale of shares in Genesis Research and the merger costs related to the takeover of Williams & Kettle.

That merger cost the company $4 million, but will be offset by $4 million of cost savings that will not be realised until the 2006 year.

Analysts said it was a bad week to make a profit downgrade.

"The market is in the process of correcting from all-time highs so there is zero tolerance for companies that miss their short-term earnings targets," said Forsyth Barr research chief Rob Mercer.

But despite the investor reaction, analysts were not unduly worried.

Most had predicted Wrightson would struggle to meet its full-year forecasts after the weaker-than-expected half-year result.

"We believe the forecasts were a big ask," said Hamilton, Hindin, Greene broker Adrian Vance.

"I'm surprised it's only down to $16.2 million - it could have been a lot worse. If they can come out and achieve that I think the market will be well-satisfied."

Wrightson shares have dropped nearly 30 per cent since February, when they hit $2.15 after the successful takeover of Williams & Kettle.

Profit downgrades

JANUARY

The Warehouse - six-month forecast down 3 per cent to 10 per cent.
Briscoe Group - predicts full-year profits down 26 per cent.
Postie Plus - expects a first-half loss of $700,000, compared with $3.1 million profit for same period last year.

FEBRUARY

Fisher & Paykel - drops full-year forecast 14 per cent.

MARCH

Carter Holt - cuts March-quarter forecast 42 per cent.

APRIL

Feltex - shares plummet after full-year forecast cut nearly 40 per cent.
Wrightson - full-year forecast down 28 per cent.