Difficult spring hits Wrightson interim profit hard

By NZPA

Thursday 20th February 2003

Rural servicing company Wrightson has posted a half-year net profit of $4.14 million, down 34 percent on the previous year.

Wrightson described the six months to December 31 as one of the most difficult springs for farming in the last 20 years, and said it was satisfied with the group's performance.

The company will pay a fully imputed interim dividend of 3.5c per share on March 31 -- the same as in 2001.

Wrightson chairman John Palmer said that although the group's operating earnings before interest and tax (ebit) fell $1.5 million, or 14 percent, to $9.6 million, it was a solid result given the climatic conditions and lower livestock values.

He said the board was still expecting a satisfactory full year result, and remained positive about the outlook for New Zealand's rural sector for the rest of the current financial year.

However, there were " a number of concerns that are receiving our ongoing attention, including the very dry conditions in some parts of the country, and the global uncertainty regarding a possible war in the Middle East".

Total operating revenue was $318.2 million compared to $332 million the year before.

Its New Zealand operations' after tax profit fell 28 percent to $5.3 million, reflecting the conditions and strategic and restructuring expenditure of $2.7 million.

The New Zealand seeds business had performed strongly, despite some product shortages due to the poor harvest in 2002. Its rural supplies stores maintained its margins and the Australian business was performing well despite the severe drought across the Tasman.

Its net loss after tax was $1 million compared to a loss of $0.6 million in the previous period, but the majority of its sales are made in the second half of the financial year, giving confidence it would be profitable for the full year.

Managing director Allan Freeth said the rural finance business returned a profit after its first 12 months of operation, and there was further significant growth potential in the business.

Cash flow from operations was negative $10.9 million for the six months, compared to positive $5.0 million in the previous period, due largely to increased inventories.

However, Wrightson was confident full year cash flows would be consistent with the positive cash flows achieved over the last two years.

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