Wrightson full-year profit up 20pc

Mark Dewdney says the outlook ahead is still challenging. Photo / Sarah Ivey

PGG Wrightson, the rural services firm controlled by New York Stock Exchange-listed Agria Corp, posted a 20 per cent gain in full-year profit, largely by paying less tax, while sales fell in a result it said showed it was able to offset a tough year in the dairy sector with gains in other businesses.

Profit rose to $39.6 million in the year ended June 30, from $32.8m a year earlier, the Christchurch-based company said.

Sales fell to $1.18 billion from $1.2b. Wrightson's income tax expense almost halved to $8.8m from $16m.

The company pre-announced some aspects of its results, saying last week that operating earnings before interest, tax, depreciation and amortisation (ebitda) "exceeded $68m in the year".

Ebitda came in at $70.2m from $69.6m a year earlier as earnings in seed and grain rose 10 per cent to $44.6m and retail gained 7 per cent to $29.2m, making up for a 1 per cent decline in livestock earnings to about $15m.

"More cautious spending from our dairy clients is the main reason for the small reduction in group revenue this year," said chief executive Mark Dewdney. "Repeating this operating ebitda result next year will again be a stretch target given current market conditions, but we will give it our best shot," he said, adding that the company will give a forecast at its annual meeting in October.

Wrightson will pay a fully imputed final dividend of 2c a share on October 4, bringing payments for the year to 3.75c, down from 4c a year earlier. PGG Wrightson shares closed up/down xc yesterday at xxc and have gained xx per cent this year, almost twice the gain of the S&P/NZX 50 Index. The stock is rated a "buy" based on three analysts who follow the company, Reuters data shows.

A geographical breakdown of revenue shows sales fell 3.6 per cent to $978m in New Zealand, its biggest market, while Australian sales gained 12 per cent to $86m. South American revenue rose 5.9 per cent to $117.5m.

"As we enter our 2017 financial year market conditions remain challenging," Dewdney said. "Many New Zealand dairy farmers face their third season of cash losses in succession. South America remains difficult to call."

He said weather in New Zealand, Australia and Uruguay "continues to be a key driver of uncertainty as it typically is in agriculture".

"We still have many improvements in our core business to realise, however, it's too early to tell how these opposing external versus internal forces are going to play out in the year ahead," he said.

PGG Wrightson:

* Year ended June 30

* $1.18b sales, down from $1.2b

* $39.6m profit, up from $32.8m

* 3.75c dividend for year, down from 4c

- BusinessDesk