Wrightson outlook - mainly fine, some cloud

By Phil Boeyen, ShareChat Business News Editor

Tuesday 5th June 2001

Rural services company Wrightson (NZSE: WRI) has had a bumper third quarter but is warning a financial settlement and difficulties in Uruguay will hit its full-year result.

For the nine months ended March, Wrightson posted earnings before interest and tax of $19.4 million, more than double last year's $9.5 million.

Ebit in the third quarter alone was $15.1 million - well ahead of the half-year figure of $4.3 million.

Wrightson chairman, John Palmer says the significant improvement reflects a strong performance across the company's New Zealand businesses.

"Even allowing for the negative impact of a small number of one off items, including the previously reported exit of the Australian potato business, the group's full year Ebit is expected to maintain the current momentum."

Wrightson has also announced the details of a settlement with Dutch-owned financial group, Rabobank, over the sale of its Farmers Finance business three years ago.

Wrightson has agreed to pay Rabobank $1.86 million relating to warranty clauses included in the sale and purchase agreement of the division.

"The settlement, which is full and final, is effectively an adjustment against the profit from the sale," says Mr Palmer.

He says the settlement was made "in the interests of Wrightson's ongoing strategic alliance with Rabobank, and to avoid a potentially costly and lengthy legal process."

Wrightson is forecasting its full year result will be impacted by the Rabobank settlement, plus difficulties in Uruguay, including the effects there of the recent widespread outbreak of foot and mouth disease.

Despite the negative factors Mr Palmer has expressed confidence in the group's ability to continue to perform well, and says it is well positioned to continue to take advantage of the strong sector conditions.

At the half-year Wrightson posted a bottom-line profit of $962,000, 34% down on the previous period, primarily from losses on its Australian operations.

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