PGW revises earnings guidance as farmer spending drops
Rural trader PGG Wrightson has revised its operating earnings guidance, saying trading conditions have deteriorated since the last market update in February.
Chief executive Stephen Guerin told Rural News the result came on the back of “strong performances” – especially from its retail, livestock and real estate businesses.
“The result reinforces the combined strength of PGW Group that serve farmers and growers across the length and breadth of the country and the overall reset of our business since the sale of our seed division in 2019.”
He says the first six months of the 2021 financial year have provided a very good start ahead of the corresponding period last year.
Guerin says PGW’s rural supplies business had seen solid growth across most categories.
“While the outlook for our rural supplies business is tempered with sheep and beef farmers cautious about the meat company schedules which are back on last year,” he warned. “However, dairy farmers are more positive with solid pay-outs expected.”
Meanwhile, Guerin says the forecast remains very positive for its Fruitfed Supplies business with positive returns for the horticulture sector and stability in prices being obtained by growers.
“The horticultural sector continues to be buoyant, experiencing good yields, profitable returns, and a positive outlook, which is driving investment and further development.”
Guerin says PGW’s agency division, which includes livestock, wool and real estate, also had a good start to the year.
“With many parts of the country coming out of drought conditions we saw a number of farmers rebuilding their capital stock numbers. Buoyant prices and widespread rain throughout the South Island created good conditions with plenty of feed on-farm stimulating farmer confidence.”
He says the company’s on-farm hybrid auctions for on-farm/auctioneer sales, bidr® – which was launched last year – will begin livestreaming auctions at
saleyards from April.
All three of PGW’s real estate categories – rural, lifestyle and residential – reported the strongest six months of sales for the past six years. “The outlook for real estate for the second half of the financial year remains positive subject to the availability of listings, especially within the lifestyle and residential sectors.”
Guerin says the company’s wool business, like others, “continued to work through depressed crossbred wool prices, associated international demand challenges.”
Meanwhile, chairman Rodger Finlay said international markets continued to support New Zealand’s primary exports.
“We are seeing reasonable confidence from our farmer and grower customers and remain optimistic about the prospects for the sector.”
PGW has announced a fully imputed 12c dividend, up from 9c in the previous interim result, which will be paid out to shareholders on 24 March. The company’s share price now sits close to $3.60 compared with $2.40 a year ago.
