PGG posts $3.1m profit

PGG-Wrightson - controlled by Singapore-based Agria - has delivered a turnaround result from last year's first-half loss of almost $6 million for an after-tax profit of $3.1 million.

PGG's managing director, George Gould, said the improved operating results were underpinned by increases in profitability from the company's livestock, retail and real estate operations.

The AgriTech operation, which includes seeds, grain and nutrition, reported earnings broadly in line with last year.

PGG shares were up slightly at 40c, following the announcement.

"Overall, PGG Wrightson's operating profitability has improved as the company follows its plan which is simply to offer high quality service and products to its farmer clients throughout New Zealand, Australia and South America," he said in a market statement yesterday.

Craigs Investment Partners broker Peter McIntyre said PGG had been through a "three-year transformation". The turnaround result earned management a "B+ on getting things right" for shareholders, who will now be expecting a dividend.

Mr Gould said that PGG Wrightson's financial position had improved by selling the finance company and it would enjoy lower debt servicing costs.

Heartland New Zealand, which wants to apply for a banking licence, bought PGG's finance unit for about $98.2 million and, according to the accounts, PGG made a $3.37 million loss on the sale.

Since Agria took control of PGG, the company has been streamlining its business and selling assets. PGG's board did not declare an interim dividend and has not made a return to shareholders since 2010, BusinessDesk reported.

PGG's earnings before interest, tax and depreciation (ebitda) increased 55% to $22 million.

The AgriTech unit, responsible for seed and grain research, reported ebitda of $38 million from $33 million a year earlier.

The retail unit, responsible for rural supplies and Fruitfed operations, increased to $17.1 million from $13.9 million. Its livestock unit jumped to $3 million from $539,000.

Earnings from other AgriServices, which include insurance, wool and real estate, were $1.29 million from a year-earlier loss of $1.8 million.

AgriServices' earnings rose to $21 million from $12.6 million.

At the end of 2009, PGG had a rights issue and Agria Corp acquired a 19% stake, which by April last year had risen to a 50.22%. Agria is jointly owned, directly or indirectly, by Beijing-based Agria Corp and New Hope, one of China's largest agricultural and food corporations.