12 Aug 2015

Tougher times ahead for rural services

11:40 am on 12 August 2015

Rural services firm PGG Wrightson (PGGW) is warning it will be difficult to reach last year's earnings, due to tougher times in the dairy sector.

Young cauliflower plants

PGG Wrighton's seeds, rural and horticulture supply divisions all continue to perform. Photo: 123RF

Chief executive Mark Dewdney said gross earnings painted a more accurate picture of its performance than profit.

PGGW's gross earnings rose 18 percent to $69.5 million in the year to June, compared with the previous year.

He said its seeds, rural and horticulture supply divisions and livestock arms all performed well, while the firm kept tight control over costs.

But plummeting dairy prices have farmers throttling back their spending and investment plans.

Mr Dewdney said that would hit earnings, though he expected better performing parts of the agricultural sector, like horticulture, would help offset that.

He feared the downturn would put pressure on farmers paying their bills, and said while they would help support customers, the company was not a bank and did need to be paid eventually for its products and services.

PGGW is investing in further training and new technology for staff to sell more products and services to customers, expanding in South America or related areas, or considering new opportunities like heifer sales to China, and merino wool deals with international garment makers.

Mr Dewdney said that would help build the company's resilience.

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