Wrightson surplus rises 41%

By Phil Boeyen, ShareChat Business News Editor

Tuesday 14th August 2001

Wrightson (NZSE: WRI) says its latest profit jump is proof that previous restructuring is paying off.

The rural services group has delivered a $10.65 million surplus for the year ended June, up 41% from last year's $7.54 million.

Earnings before interest and tax rose 58% from $13.1 million last year to $20.7 million while sales grew by more than $100 million, to $704.8 million compared with $596.1 million previously.

The company says the result is a solid improvement over last year's performance and reflects a strong focus on correcting structural and operational issues that have impacted it over recent years.

"While the company has undoubtedly benefited from the strong sector conditions, the work that has gone into strengthening client relationships, increasing market share and improving margins, positioned Wrightson to make the most of the rural upturn," says chairman John Palmer.

"This result was achieved despite the negative impact of several one-off items. These included the sale of the loss-making Australian potato business, and the settlement of outstanding warranty claims with Rabobank."

The impact of the one-off items has been $2.9 million on the Australian potato business and $1.9 million for the Rabobank settlement.

Wrightson says the year's result has also been impacted by losses of $3.5 million sustained on its business activities in Uruguay, due to trading losses and the goodwill write-off on the business.

"The Uruguayan losses resulted from a combination of a widespread drought in that country, followed by an outbreak of foot and mouth disease. The decision to write off all the goodwill on the business is a prudent one given the devastating impact of these two events on agriculture in Uruguay," says Mr Palmer.

The company says Uruguay remains a strategically important market for Wrightson's seeds, and work is progressing on a recovery plan for the business.

A turnaround in the company's Australian forage seed business has also helped the latest result.

Earning before interest and tax for the for the Australian Seeds business, excluding the Australian potato business, improved from a $1.44 million loss last year to a positive result of $250,000.

Wrightson's board and management says they are pleased with the company's progress during the year, particularly the resolution of the major business and profit issues in Australia, and are positive about its performance in the near term.

"The company has laid solid foundations over the past three years, and it is positioned to continue to take advantage of the buoyant sector and to further develop its Solutions Strategy - a strategy that is designed to drive longer term sustainable earnings and grow the value of the group for shareholders."

A final dividend of 7 cents per share has been declared, representing a 100% payout of the company's net earnings.

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