Forum Archive Index - February 2001

[Mike Hudson <MHudson@placemakers.co.nz>]

I'd sell

Wrightsons has had a chequered career over the last few years. The rural
economy has had major structural problems in the last three decades but
apart from suffering that the Board and Management have made some disastrous
mistakes.

In the late eighties the then chief executive, Michael Andrews (yes the one
and the same) split the company into divisions with the intention of putting
each profit centre under closer scrutiny, making people accountable etc.
Unfortunately they forgot about the PBC (Poor Bloody Customer) in the
restructure. Instead of dealing with one agent for all his needs  the PBC
found that he had to deal with one person to sell their stock, another for
their seed requirements, a third for wool and so on. The customers didn't
like it and the staff didn't like it plus it added considerably to the cost
structure. 

After Mike's brief sojourn the company was floated off from Fletcher
Challenge, $1.65  per share, and bumbled on for a number of years under Sir
Ron Trotter and what was left of the old guard.. Many of Mikes "reforms"
were undone and performance steadily declined as the company slid into
apathy. Of course the Board had the convenience of been able to blame
adverse weather conditions, low commodity prices and so on.

Three or four years ago with the situation becoming desperate they brought
in a wunderkind form Coal Corp to shake up the company which he did to such
effect that he shook out a lot of the best people and heap more PBCs. He
also sold the jewel in the crown, the operation that gave the company some
differentiation in the market place, the finance arm. The company was now in
total disarray.

The wunderkind went and finally the Board realised that rural servicing is a
business that depends on relationships; its about people talking to people.
They are now going back to basics and trying to get close to their
customers. The question is "is it too late?" They have lost massive amounts
of market share in the South Island to Pyne Gould Guiness and the
co-operatives and this will be hard to pull back. I don't know what as
happened in the North but I would expect more of the same.

As far as having a "corker" first half goes, if they can't make money in the
current farming boom they never will. The test will be what happens in the
next downturn.

If I was putting my money in the rural sector it would be in PGG even though
they are unlisted. PGG in recent times have also been boosting up their
finance operations. REI and WKL would also be better bets IMO

The jump in today's price may be some sort of "play" although volumes are
small. If my memory serves me right GPG have a big chunk of WRI as well as
ENZA and Turners and Growers and don't WRI have a shareholding in REI ?

Disc Hold no WRI and the opinions above only reflect the writer's
perceptions and are gleaned mostly from gossip and hearsay 

Cheers
Mike H   


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