PGW revises earnings guidance as farmer spending drops
Rural trader PGG Wrightson has revised its operating earnings guidance, saying trading conditions have deteriorated since the last market update in February.
For financial year ending June 30, 2022, PGW reported a net profit of $24.3 million, up 7% on the previous year.
Total group revenue rose 12% to $952.7 million.
The company’s flagship retail and water achieved solid results: operating gross earnings jumped $15m to $52m.
PGW chief executive Stephen Guerin says its core focus remains to add value to clients’ businesses, much of this through the technical ability of its people.
“During the year we continued to invest in training for our people from both a technical and sales perspective. Our commitment to the personal development and upskilling of staff supports a very stable and knowledgeable rep force.
“As clients see the value in the expertise of our people, we continue to see new clients coming into stores and asking reps to come on-farm and orchard. This is in turn continues to be reflected in the incremental market share gains.”
Supply chain disruption impacted timelines in sourcing products.
But Guerin says being able to get the right products to clients at the right time has highlighted the importance of the strong relationships the company has with suppliers.
“To help mitigate supply chain risks, we have also sourced product earlier and carried more inventory than we have historically.”
Guerin says it was an outstanding year for PGW’s rural supplies business.
“Rural Supplies has sustained the momentum of recent years and has investigated opportunities to expand into… categories where there is unmet client demand.
“Our reps continue to increase their usage of technical platforms which streamline their day-today activities and make their interactions with clients more efficient."
PGW’s new chairman, Joo Hai Lee, says the financial year results are a record for the business and a result the PGW team is very proud of, especially after a challenging year at many levels.
“Like all businesses, we have had to navigate managing Covid-19 protocols, dealing with a high proportion of health-related staff absences, responding to supply chain challenges, and resourcing the business in an extremely tight labour market.”
The PGW board has declared a final dividend of 16c/share, taking the total paid out this year to 30c/share.
The dividend will be paid out in early October.
Commenting on the outlook for this year, Lee noted that the profitable run for most New Zealand agri sectors looks likely to continue through the remainder of 2022 and into the coming year.
However, inflationary pressures on input costs will likely translate into reduced on-farm profits, and exporters will still need to navigate high shipping costs and challenging logistics.
While input prices are increasing, rising food prices are expected to be beneficial overall for New Zealand’s agricultural sector, he says.
Lee remains cautiously optimistic about the financial year ahead.
“Consumers in countries that have and continue to remove restrictions, want highquality and safe food that our farmer and grower clients produce,” he says.
“The reopening of New Zealand’s borders to travellers should over time help to ease the tight labour market.
“The war in Ukraine has tightened the global commodity market and although there have been recent drops in the global dairy auction, elevated dairy prices are expected to remain.”
