PGW
28/10/2015 08:41
FORECAST
PRICE SENSITIVE
REL: 0841 HRS PGG Wrightson Limited
FORECAST: PGW: PGG Wrightson's first quarter on track
Chief Executive, Mark Dewdney announced today that PGG Wrightson Limited*
(PGW) is forecasting that its full year Operating EBITDA for 2016 including
earnings of associates** is expected to be in the $61 to $67 million range.
"While the recent bounce in global dairy prices provides welcome relief for
the sector, our view is that this news has come a little late for New Zealand
dairy farmers to materially increase their spending with us for the current
season. A low dairy pay-out forecast at the time farm budgets were set
remains the key reason we believe our earnings may dip in 2016 from last
year's excellent result. Although dairy is a significant part of the overall
story, you need to look at the wider agri-sector to get a more comprehensive
view on things. For example, confidence remains high in beef, horticulture
and viticulture, sectors where PGW is very strongly represented.
Furthermore, continued improvements within PGW's business will help support
earnings in 2016 and continue to drive growth into the future."
"With the first quarter of the financial year behind us, I'm pleased to say
we are tracking slightly ahead of where we thought we would be." Mr Dewdney
continued, "In particular, New Zealand Seeds has had a strong start to the
year."
Chairman Alan Lai commented that the improvements to PGW Group extend deeper
than the earnings growth shareholders have seen in recent years. "We have
every faith that the business is on the right path. The Board is confident
that our strategy has the business focussed on the right areas and believes
that it achieves the correct balance between operational execution,
continuous improvement and growth."
Twelve months after introducing shareholders to the group strategy based
around the three themes of 'improve', 'grow' and 'game-changers', Mr Dewdney
reflected on some of the achievements over 2015. "All our businesses have
embraced the 'improve' theme of our strategy and have continued to develop
ways to make it easier for customers to do business with us and to more
easily deal with multiple parts of our business. We call this 'One-PGW'. We
have also completed several significant IT-related projects, such as the
roll-out of tablets across our retail field teams and livestock reps. These
mobility solutions and improvements to our IT infrastructure create a
platform to use technology to further enhance our customer experience."
"Within the 'grow' theme of our strategy we are continuing to gain traction
with dairy clients and our Water business in implementing improvements to
systems and processes that we believe will see it emerge as the leader in
that market. Perhaps the most noteworthy achievement in the implementation
of our strategy recently has been in our South American operations.
Construction of the new logistics centre in Montevideo is at an advanced
stage and we expect that it will be commissioned this calendar year. This
provides our Seeds business in Uruguay with the infrastructure it needs to
take its operations and business to the next level and ultimately increase
sales. We also announced in July this year that we have acquired fifty
percent of one of our key strategic partners in the region, Agrocentro
Uruguay. This acquisition touches on both the 'grow' and 'game-changer'
elements of our strategy. While it provides a clear growth opportunity,
perhaps even more importantly, Agrocentro's foothold in rural retail
complements our existing operations and replicates the business model we have
in New Zealand."
To summarise Mr Dewdney noted that "2015 was an excellent year for PGW. The
business managed to grow its earnings despite softening market conditions and
this is a strong indicator that we are on the right track."
28 October 2015
Further information:
Mark Dewdney
Ph 027 248 3151
End CA:00272401 For:PGW Type:FORECAST Time:2015-10-28 08:41:01
