Aussie losses weigh down Wrightson

By Phil Boeyen, ShareChat Business News Editor

Tuesday 27th February 2001

Wrightson's half-year profit has been dragged down by its Australian operations, which lost money almost as fast as it was made in New Zealand.

For the six months ended December the rural servicing company made a net profit after tax of $6.4 million in New Zealand but lost $5.4 million in Australia.

Overall Wrightson's profit fell 34% on the previous year's interim result to $962,000.

The company says the lower group profit was as a result of not recognising Australian tax benefits due to prior period losses in the business, although the tax benefits should be able to be recovered in the future when the Australian operations return to profitability.

Australian losses included $3.2 million in its Potatoes business and $2.2 million in its Seeds and Research division.

The commercial operations of the Potatoes business have now been sold and the exit costs are included in the latest results.

Aside from the loss-making Australian operations Wrightson says nearly all its other businesses recorded improved earning before interest and tax, including its Rural Supplies division which jumped 160%.

It says the trading environment has been positive, with strong growth in New Zealand farm incomes bought about by a combination of record low exchange rates, solid world demand for primary products, and good growing conditions.

Wrightson says the outlook for the rural sector is optimistic and the board and directors say they are pleased with company's progress in the first half of the financial year.

"The after tax result for the half-year is unsatisfactory, but our New Zealand business is performing strongly, and we are now confident about resolving the major business and profit issues in Australia," the company said in a statement.

The directors are predicting full year earnings before interest and tax to exceed last year's $13.1million, and have declared an interim dividend of 1 cent per share.

Despite the confident outlook the half-year result has disappointed investors who have been rewarded recently with considerably improved results from other rural stocks. WRI shares were marked down 10% to 68 cents immediately following today's profit announcement.

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