18 Dec 2010

PGG Wrightson issues profit warning

6:03 am on 18 December 2010

PGG Wrightson has announced a profit downgrade, citing difficult trading conditions.

The company says trading conditions in the rural sector have been difficult due to poor weather and farmers remaining reluctant to spend.

PGG Wrightson says earnings in the first half of this year are now expected to be 40% lower than last year, but earnings in the second half will be similar to the same period last year.

It now expects to make an after tax profit of between $15 million and $18 million, compared to more than $23 million made in the same period last year.

The recent termination of its management contract with New Zealand Farming Systems Uruguay will also reduce earnings by nearly $4 million, while its finance arm is setting aside more money to cover bad debts, mostly due to two large dairy loans.

On the positive side, PGW says it has used the $20 million from the sale of its stake in New Zealand Farming Systems Uruguay to reduce its debt to $157 million and hopes to further reduce it to $133 million by the end of the year.

Meanwhile, the company says it expects to appoint a new managing director in the early new year. The post has been vacant since former managing director Tim Miles left in October.

PGG Wrightson shares fell 4 cents to trade at 44 cents at midday on Friday.