PGW
24/02/2015 08:31
HALFYR
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REL: 0831 HRS PGG Wrightson Limited
HALFYR: PGW: Half Year Results Announcement
PGG Wrightson Grows from Strength to Strength
PGG Wrightson Ltd* (PGW) has announced its strongest interim performance for
seven years.
For the six-months ended 31 December 2014, PGW achieved Operating EBITDA
excluding earnings of associates** of $33.6 million, up from $22.3 million
for the corresponding period last year.
Mark Dewdney, Chief Executive, called it an outstanding result with increases
recorded across most areas of the business.
"The momentum we've built up as a group over the last few years is continuing
to increase sales and earnings. This is a particularly pleasing result for
the first half and whilst there are headwinds facing the agricultural sector
such as falling milk prices and more recently, a dry summer, we are
cautiously optimistic about the remainder of the financial year.
"Right across our diverse business we've got great people and great products.
We are working hard to stay ahead of our competitors, and our customers are
continuing to respond to our improving offering."
Group revenue was up 3% and net profit after tax increased to $19.7 million,
up from $13.4 million for the prior corresponding period.
PGW's Board declared a fully imputed dividend of 2 cents per share, which
will be paid to shareholders registered at the record date of 12 March 2015.
The dividend will be paid on 8 April 2015.
"The improved results were anchored by improvements in PGW's three largest
businesses: Retail, Livestock and Seed & Grain", Mark Dewdney said.
"Retail grew sales and lifted margins to achieve a $2.6 million increase in
Operating EBITDA. This improvement was led by our core agronomy categories,
where our technical expertise is very strong.
"Livestock improved Operating EBITDA by $2.3m. Livestock tallies were
broadly in line with the prior corresponding period but prices were higher in
cattle and sheep, resulting in higher commission income and earnings.
"Seed and Grain posted a $3.6 million increase in Operating EBITDA (excluding
earnings of associates). The increased demand for supplementary forage crops
in New Zealand, such as fodder beet, brassicas and herbs, played a big part
in this improvement."
PGW's balance sheet remains strong. The June 2014 purchase of 40
previously-leased properties increased debt by approximately $30m. The
corresponding decrease in lease expense over the six month period also
explains a significant part of the $2.5m lower corporate overhead cost at the
Operating EBITDA level.
Alan Lai, PGW Chairman, commented, "We are pleased to see continued
improvement across all segments of our core businesses. The Board notes that
the execution of the strategy outlined at the Annual Shareholders Meeting in
October is on track across the three themes of improve, grow and change."
Mark Dewdney said, "Some current examples of our strategy implementation
include launching the project to construct our new logistics facility in
Montevideo, Uruguay, the successful implementation of our back office systems
upgrade project, and the national roll out of tablets to all Retail Technical
Field Representatives and Livestock agents, which creates the platform to
build up a suite of mobility solutions for our frontline staff.
"PGW has also recently announced that it has become the exclusive and head
agent for Roundup(TM) products in packages of five litres and larger.
Roundup(TM) will be marketed and distributed to all rural merchants through
the company's Agritrade business unit. This is new business for PGW and an
example of the type of opportunities that we are targeting to grow our
business further. At the same time we are also ensuring that we are doing
the right things in our business to prioritise the welfare and safety of our
staff. We have implemented a range of health and safety related initiatives
to lift awareness, to identify and address risk areas and to further promote
a culture where workplace safety is simply part of the way we do things at
PGW."
PGW's last trading update in December reiterated guidance that PGW was on
track to better last year's Operating EBITDA (excluding earnings of
associates) of $58.7 million. While the impact of a number of factors in the
remainder of the financial year are yet to be determined, PGW updated
full-year guidance to a $62 to $68 million range.
"The strength of this first half result has given us confidence that the 2015
full year result will be a solid one", explained Mark Dewdney, "However there
is still a lot of trading activity to get through yet.
"The dry summer in New Zealand will lead to reduced farm spend if it remains
as widespread as it was in 2013. On the other hand, if the dry conditions
become more localised, that could stimulate trading in livestock and feed.
The livestock segment makes most of its contribution to earnings in the
second half and changes in livestock prices will continue to affect the
results.
"The weather over the next few months will also impact the results out of our
Australian and South American operations. The earnings of both businesses
are weighted towards the second half of the year. Australia is currently
shaping up similar to last year, but things can change quickly there. It's
been very wet in our key selling areas in South America, which together with
lower commodity prices has so far constrained demand somewhat.
"While these external factors will impact our results going forward, both
positively and negatively, PGW is well placed operationally to capitalise on
the opportunities in the sector. The business is on the right track."
Further information:
Mark Dewdney, Chief Executive Officer
Ph 027 248 3151
End CA:00261017 For:PGW Type:HALFYR Time:2015-02-24 08:31:45
