Sharechat Logo

Wrightson warns weak wool demand, slow spring listings weigh on earnings

Tuesday 19th February 2019

Text too small?

PGG Wrightson has lowered expectations for its continuing operations even further, saying weak international demand for wool and a slow start to spring farm listings weighed on earnings. 

The company flagged in December that its seed and grain business would post a loss, but wanted more time to determine the impact the local weather would have on its rural services arm.

Today, the company said operating earnings from the rural services division in the six months through December were about $5 million below the $23.4 million reported a year earlier.

Wrightson's retail business typically generates 85 percent of its earnings in the first half, and that's not expected to catch up in the second half. Its water business was also held back by a lack of on-farm development, it said. 

"This softening in performance is also partly attributable to the impact of weak international demand for wool and a slow start to the spring season in the rural real estate sector," chief executive Ian Glasson said in a statement. 

Wrightson will be a shell of its former self once it completes the sale of its seeds division to DLF Seeds for $434 million in cash and debt. The deal was cleared by the Commerce Commission last week, and Wrightson today said DLF has received counterparty consents from research and development joint venture partners. 

The NZX-listed firm said it will record a capital gain of at least $120 million once the transaction is completed, which will then flow through to net profit. 

Wrightson has signalled plans to return up to $292 million of the proceeds to shareholders via a buy-back or share cancellation.

The shares fell 3 cents, or 5.4 percent, to 53 cents today, valuing the company at $400.1 million. 

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar rides Australian dollar coat-tails higher
Electricity switching at four-year low amid high wholesale prices
S&P lowers Asset Finance's credit rating to
Trade Me halts sales of semi-automatic firearms
NZ service sector expansion slows in February
Synlait and Fonterra to report diverging earnings
Metroglass downgrades profit again
18th March 2019 Morning Report
NZ 4Q GDP growth likely muted
NZ dollar rangebound; focus on domestic GDP and US Federal Reserve

IRG See IRG research reports