Major turn around by PGG Wrightson

PGG Wrightson has achieved a major change in fortunes, with a net profit after tax of $24.5 million for the year ended June, following the previous year's loss of $30.7 million.

The 2011-12 financial year was primarily about "getting back to the fundamentals", building on the core businesses to the benefit of stakeholders, particularly farming clients, managing-director George Gould said.

Earnings before interest, tax and depreciation (ebitda) was $55.2 million (up from $49.4 million for the previous corresponding period) from operating revenue of $1.3 billion (up from $1.2 billion).

The financial result followed strong performances in the majority of the company's business units, highlighted by record returns from livestock, positive gains in both retail and real estate operations and the successful reintegration of wool brokerage into the business, Mr Gould said.

PGGW attributed a substantial turnaround in net operating cash flow from $4.9 million last year, to $58.6 million this year, to a strong focus on working capital and particularly debtor management, while enabling the company to reduce bank debt.

The livestock sector experienced high early season values for sheep, beef and dairy, which helped that business unit in achieving a "stand-out" financial performance.

Some key appointments resulted in a strengthened dairy presence, with a 38% improvement in dairy cattle volumes for the season.

Live dairy cattle export and velvet sales also contributed strongly to earnings.

With the Silver Fern Farms procurement contract in its third year, the business was on track to meet its target volumes for the season.

Rural supplies had a strong year, benefiting from increased agri-chemical sales on the back of positive growing conditions through spring and summer.

The wool business benefited from high wool production due to good feed levels. More growers moved to contract positions, in the wake of market volatility.

Confidence returned to the rural and lifestyle real estate market, reflected in a 54% improvement in revenue from 2011, while irrigation and pumping revenue was up 28% on the back of new on-farm irrigation and dairy shed reticulation development.

While the results of agri-tech were impacted by lower than anticipated sales of proprietary seeds in Australia as a result of the wettest season on record, the division remained an important contributor to earnings. The company believed the agri-tech business had the potential to generate growth, Mr Gould said.



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