Profit turnaround for Wrightson

By Phil Boeyen, ShareChat Business News Editor

Tuesday 29th August 2000

Rural trader Wrightson has delivered a strong profit turnaround which it says is due as much to better management as the improved farm economy.

The company's June full year profit was $7.5 million and compares with a $9.3 million loss last year. A 3 cent dividend has been announced.

Wrightson's board and management says the earnings improvement is partly a result of improved livestock prices and on-farm profitability in New Zealand, but the strongest factors influencing the profit improvement were operating cost reductions and group-wide earnings improvements projects that delivered results.

"While the favourable season clearly helped, the result reflects very much on management's focus on fixing Wrightson's business fundamentals."

In sector analysis, company gross revenue increased 5.7 per cent to $596.1 million due mainly to increased revenues from Wrightson's livestock, rural supplies and forestry businesses. Gross revenues declined within its wool business and grain and seed business.

The company says the 1999/2000 season was considered by many New Zealand farmers to be the best for 20 years, with sheep and beef farming profitability exceeding most farmers' expectations, and sustained profitability is expected for the next three years.

Dairy farmers benefited from a relatively warm and dry winter and excellent spring weather which saw increased milk production. Apart from pipfruit and summerfruit, horticultural farming experienced a very good year, and arable farmers also improved their profitability.

However despite Wrightson's return to profitability the company says it is only the first step, and it has plenty of work to do before it generates a satisfactory return on capital.

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