The primary sector is in the grip of austerity, with non-essential and discretionary spending paused, PGG Wrightson says.
Reporting an 80% reduction in net profit for the 2024 financial year compared with the previous year, PGW directors won’t pay a dividend and expect the downturn to last another 18 months.
It is too soon to forecast trading performance in the FY25 year, but some guidance might be available at the annual meeting on October 15, chair Garry Moore said.
For FY24, operating earnings were $44.2 million, down $17m, and net profit was $3.1m, down $14.5m.
Revenue dropped by 6% to $916m, the first drop in revenue for PGW in six years.
Most of the decline came in the retail and water division where revenue was down $52m or 24%.
Chief executive Stephen Guerin said customers need optimum value from their spending and PGW staff members provide professionalism, technical knowledge and service.
Fruitfed Supplies did well in Crop Monitoring Services and sales of agricultural chemicals.
Moore said the agricultural sector is cyclical, and “we have seen these ups and downs before and remain positive about the longer-term prospects of the sector”.
“Based upon current indications, the rural servicing market looks like it will remain subdued through the current calendar year.
“There are, however, some positive signals with inflationary pressures easing and input costs stabilising.”
In the livestock, wool and real estate agency businesses, operating earnings were down 23% on the prior year’s strong result.
Revenue was steady on $180m.
On the June 30 balance date, PGW debt was $59.2m, down $6m or 10%.
Capital expenditure of $22.8m included spending on IT systems and purchase of the co-owner’s half share in Frankton saleyards, Hamilton.
The share price has halved in the past 12 months, from $4 down to $2 and the market capitalisation has dropped to $150m, not far above the net tangible assets.
Most of the fall in share price occurred during February to April when majority shareholder Agria Corporation sought additional director positions but withdrew its pending disruptive actions.
Director nominations are now open in advance of the October 15 annual meeting.
