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PGG Wrightson nearly doubled its debt last year. (file photo)
Rural services firm PGG Wrightson reported a 28% drop in annual profit as rising debt and a sluggish property market weighed on earnings.
The company said in a statement to NZX on Tuesday that its profit for the year ended June 30 fell to $17.5 million from $24.3 million a year earlier. Sales he rose 2.4% to $976.2 million.
The company’s debt nearly doubled from $32.8 million to $65.3 million, and the bank’s interest cost rose 377% to $4.6 million.
Wrightson Acting Chairman Keane Sen said despite a “challenging backdrop” the company saw strong demand for livestock, wool and water, and local retailers had “outstanding performances”, with most He said that the business sector of the company is performing well.
“The exception is our real estate business, which continues to operate in challenging market conditions,” he said.
Chief Executive Officer Steven Guerin said the real estate market was fueled by high interest rates, tougher regulatory requirements, softer commodity prices and uncertainty about the outcome of the October general election, which has led to negative sentiment. He said he had one of the toughest years in years.
He said sales fell sharply due to lower market activity.
Still, he said the real estate business has maintained its market share and is growing in some areas.
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The cattle swat throw is a popular event at the New Zealand Country Games in Palmerston North.
Wrightson’s retail and water division, which includes retail stores and irrigation services, reported sales increased 3.2% to $785.3 million and profit before interest and tax increased 1.9% to $37.9 million. The segment’s net income fell 3.7% to $24.5 million as interest expense more than doubled from $1.7 million to $3.8 million.
The company’s agency division, which includes livestock, wool and real estate businesses, reported a 0.3% decline in revenue to $188.8 million and a 31% decline in pre-interest and tax profit to $7.6 million. The division’s net income fell 57% to $2.6 million, while interest expense rose 36% to $3.9 million.
Wrightson will pay shareholders a final dividend of 10 cents, bringing the annual dividend to 22 cents, up from 30 cents in the previous year.
Wrightson, 44% owned by Singapore-based Agria Group, fell 0.5% to $4.25 shortly after the NZX opened at 10 a.m.
