Real-estate setbacks gnaw away at Allied Farmers

More than $1 million will be shaved off Allied Farmers' profits this year as real-estate setbacks bite the company hard.

The Hawera-based company said yesterday that its forecast results for the half-year to June 30 would likely be $150,000 behind the same period last year.

It meant the listed rural services provider would make a pre-tax profit of about $2.15 million for the full year. That compared with an earlier forecast of about $3.5 million and a $3.47 million result achieved last year.

Chairman John Loughlin said problems at Allied's real estate division were a major factor.

The loss of several key staff to PGG Wrightson affected commission income and the property market was a "much harder game" this year. "Last year, the property market was booming and transactions were ripping through - this year it's a whole new ball game."

The turnaround at the Allied Pine sawmill operation in Wanganui had also been slower than expected. Loughlin said it had been hit by a high dollar, higher shipping costs, lower lumber prices and inefficiencies.

But a lower dollar and restructuring were now helping the sawmill. Other factors driving the 2006 result down would be increased doubtful debts in the merchandising and pine businesses.

The takeover of Prime Finance was now unconditional with 98.7 per cent acceptances. Loughlin expected Prime to add $1.2 million in annual pre-tax profits to Allied Farmers.