PGG Wrightson's profit growth stalled in the first half, which the rural services company blamed on low prices for dairy and wool and reduced production of red meat which had made farmers more cautious about spending.
Profit fell to $15.99 million in the six months ended December 31, from $16.07m a year earlier, the Christchurch-based company said in a statement. Sales declined to $608m from $623m.
Sales and earnings fell at both the rural services and the smaller seed & grain division in the first half but the company said it was more upbeat for the second half of the year, reiterating its guidance for full-year operating earnings before interest, tax, depreciation and amortisation of $62m to $68m while raising its forecast for net profit to reflect anticipated one-time gains such as from property sales. Flat earnings are an improvement on the year-earlier result, when profit fell 19 per cent.
"Low dairy prices, reduced production of both dairy and red meat, tough wool trading conditions, and a wet start to spring led to cautious spending from New Zealand's farming customers during the six months to 31 December 2016," said chief executive Mark Dewdney. Trading conditions were expected to improve in the second half "and the early indications for our 2018 financial year are looking encouraging."
The company will pay an unchanged interim dividend of 1.75 cents a share on April 4 with a record date of March 10.
