Agria brushes off Wrightson profit warning as 'temporary setback'

Thursday 16th May 2013

Agria Corp, the New York Stock Exchange-listed agriculture investor whose top executives left last year, has brushed off local subsidiary PGG Wrightson's profit warning as a "temporary setback" and is still optimistic about the long-term outlook for the New Zealand rural services firm.

Executive chairman Alan Lai, who is also a director on Wrightson's board, said the New Zealand firm's forecast that annual earnings will be between 13 percent and 27 percent lower than a year ago was due to "weather and other conditions outside of our control" and he is still "optimistic about the long-term outlook for PGW and Agria." The Singapore-based firm with Chinese operations owns a majority stake in Wrightson.

"We are committed and focused on building a durable franchise and institution that can thrive in strong climatic and weather conditions, but can limit the downside in adverse conditions as we continue to build our business in different geographies around the globe," Lai said in a statement to the NYSE.

"We expect to both grow quickly and reduce the volatility in our results," he said.

This week Wrightson said earnings before interest, tax, depreciation and amortisation are expected to be between $40 million and $48 million in the 12 months ending June 30, down from $55 million in 2012. The New Zealand firm's shares plunged 10 percent on the warning and traded at 35 cents apiece yesterday.

Agria completed a $144 million partial takeover of Wrightson in a deal that brought on China's New Hope International and Ngai Tahu as minority shareholders in the holding company.

Wrightson is the major source of revenue for Agria, which it uses to run its international operations across China, New Zealand, Australia and South America.

Agria's shares dropped 3.7 percent to US$1.05 on the New York Stock Exchange, having climbed 58 percent this year. The company's market capitalisation of US$60.4 million is a 46 percent discount to the value of its stake in Wrightson, whose market cap is $264.2 million, or US$217.9 million.

BusinessDesk.co.nz

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