Wrightson investors keep the faith despite profit fall

Friday 29th August 2003

A weaker profit has done little to dent the confidence in rural services company Wrightson as investors continue to chase the stock for its high yield and good prospects.

The shares, which climbed to a high of $1.45 following the result, have held firm despite a 13% fall in the company's full-year profit last week.

Whether the good run continues could depend on the overall performance of the rural sector, although the company has shown it can perform well enough even when conditions are not in its favour.

Under chief executive Allan Freeth, the once-troubled group has shaken off its appalling 1999 year when its shares fell to 30c.

Costs have been cut and an electronic logistics management system introduced.

The company said reduced livestock prices, a slowdown in farmer spending and bad weather affected the latest result.

Similar conditions are expected in 2003/04 with farm prices moderating further.

However, a strong balance sheet means there is capacity for new investment, most likely in seeds, finance and agri-feeds, which the company has targeted as earnings growth areas.

The company said it was well positioned to maintain its high dividend payout ratio of 11.5 cents at 84% of net profit.

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