Tough times hit Allied Farmers

Competition and falling farm incomes have hit the profit of Hawera-based rural services firm Allied Farmers.

The company today reported a 60 per cent drop in full year profit after tax to $1.2 million, down from $3.1m a year earlier.

Trading revenue was down 1.8 per cent to $79.12m, while total operating revenue lifted 0.7 per cent to $85.17m.

The company signalled a final dividend of 2.0 cents per share bringing the total dividend to 7cps.

Last year the dividend was 10cps, with an additional 5cps special dividend also declared.

Allied Farmers chairman John Loughlin said farm expenditure had tightened resulting from reduced farm incomes, particularly for sheep and beef farmers.

Margin pressure was also "significant" as the various market participants repositioned following recent industry consolidation, Mr Loughlin said.

During the year Allied rivals Pyne Gould Guinness and Wrightson merged to form PGG Wrightson, which debuted on the sharemarket last October .

Mr Loughlin said Allied's finance, livestock and wool operations had performed strongly, but its Allied Pine, real estate and merchandise operations were disappointing.

The outlook was for a significant recovery in profitability resulting from improved rural trading, a full year of an expanded finance business and a stemming of the losses in Allied Pine, he said.

The operating surplus before tax from Allied's rural services operations fell from $4.2m to $2.5m, even though the company increased turnover and market share in most areas of the sector.

Timber mill operation Allied Pine's made a pre-tax operating loss of $1.5m. Most was incurred in the first half of the year and operating performance improved in the second half, but was not satisfactory, Mr Loughlin said.

The Pine result included provisions of $300,000 established in the second half for debtors outstanding from prior periods.

Allied Farmers Finance performed strongly, with the finance receivables book growing from $42.6m to $47.6m and the operating surplus lifting from $600,000 to $1m.

During the year the Allied group bought 100 per cent of Prime Finance, and it was planned to merge Allied Farmers Finance and Prime Finance in the coming months.

Largely because of the acquisition of Prime Finance, but also the Hawera Mitre 10 store, total assets had increased from $76.9m to $204.2m.

Allied shares last traded on Monday at $2.25, having ranged between $2.62 and $2 in the past year.

- NZPA