Wrightson more than doubles year profit to $21.2 million

By NZPA

Thursday 22nd August 2002

Rural services company Wrightson Ltd today reported it had more than doubled its June year net profit to $21.2 million.

It posted a fully imputed 8 cents per share dividend, making 11.5cps for the year, up from 8.5cps the previous year.

The company said the higher dividend reflected the board's confidence in the year ahead and its ability to sustain shareholder value and tax efficient returns. It will paid on September 27.

Chairman John Palmer noted that Wrightson retained a very conservatively geared balance sheet and was well positioned to maintain a high dividend payout ratio, and to consider growth opportunities.

The result was on lower sales of $669.3 million compared with $704.8 million the year before.

The pre-tax profit of $31.4 million compared with $20.4 million. Tax provided was steady at $10.4 million. Earnings per share rose to 15.76 cents from 7.9 cents.

Mr Palmer said the company's aim of providing a "solutions-based business" had begun to realise financial and operational gains.

"The favourable sector conditions provided a solid foundation from which to make further progress towards Wrightson's twin goals of reducing its exposure to changes in the commodity cycle and exchange rates, and producing more sustainable earnings," he said.

Mr Palmer said Wrightson was successfully moving from an essentially commodity-driven, transaction-based business to a customer solutions business across all facets of its operations.

The company estimated the Economic Value Added (EVA) earnings it had created had more than doubled to $7 million (unaudited) during the year.

The result was achieved after $4.6 million of strategic expenditure on several initiatives, including solutions development, an alliance with biotechnology partner Genesis Research and Development Corp, Rural Supplies logistics implementation, and the investment in a strong wool marketing concept company, OneWool.

New Zealand operations' after tax profit of $18.1 million was 7 percent above last year, reflecting a strong year for Seeds and Agri-feeds in particular, and an improved performance from Livestock.

The Australian net profit after tax of $3.3 million was a substantial improvement over the underlying result last year of $200,000. This reflected a focus on improving revenue, and on lowering costs.

The loss in Uruguay was reduced from $1.2 million last year (before the goodwill write-off) to $200,000.

Expenditure was contained as a result of reduced costs in Australia, Uruguay and the wool business, and the absence of unusual write offs and costs experienced in past years.

Cash flow from operating activities was $25.4 million for the year compared to $14 million last year, and Wrightson said its balance sheet remains strong with no term debt.

Managing director Allan Freeth said that operating conditions in New Zealand and Australia had been generally positive throughout the year for the majority of clients, and consequently for Wrightson.

The company has a positive outlook for New Zealand's rural sector for the next 12 months, and although it sees a significant decline in incomes for dairy farmers, and to a lesser extent, sheep and beef farmers, the outlook is positive relative to average incomes during the 1990s.

Mr Palmer said that this environment "means a progressive business outlook for the group".

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