PGG Wrightson (PGW) earnings are down on expectations after a “transformational” 2019.
PGW chief executive Ian Glasson told journalists, after the results announcement, that there was “misleading information in the market” about potential loss of IP in the sale. “It is important that I correct this,” he said.
Glasson says PGW’s intellectual property in seeds was invested in three joint ventures with the Crown: Grasslands Innovations, Endophyte Innovations, and Forage Innovations.
“A great example of how the IP will remain in NZ is as follows: take one of our products, known as Raphno, released into the market in 2018.”
“It’s a brassica developed in NZ, now sold in Australia, and has sales which attract royalties which return to NZ, to PGW Seeds and our joint venture Forage Innovations, including the NZ Crown,” Glasson explained.
“After DLF Seeds takes ownership, more of this highly valued NZ intellectual property will be available to the northern hemisphere and will therefore increase the net benefit to NZ.”
A week before announcing its annual results, PGW had revealed the conditional agreement to sell the PGW Seed and Grain business to DLF Seeds for NZ$421 million.
Glasson emphasised that PGW’s rural services team and the seeds team would continue to work together closely.
He says PGW Seeds (under DLF Seeds ownership) would make a long-term distribution agreement with PGW and would also continue to trade under the PGG Wrightson Seeds brand.
Meanwhile, said Glasson, remember PGW has the strongest nationwide rural services offering in NZ, covering the country, and the sale of the PGW’s seed business will not change that.
“After the DLF Seeds transaction, PGW will have a strong rural services business with revenue exceeding $800m and good profitability (FY2018 operating EBITDA of about $35m).”
The sale is conditional on regulatory and shareholder approvals.
“We intend to provide more information on our progress, including an earnings forecast, at the time of the annual meeting in October,” Glasson says. In the meantime, he says it is “very much business as usual”.
“We are working to ensure minimal disruption for our customers and staff,” Glasson said.
“Our people are the key to our continued robust performance; their commitment and passion for agriculture ensures we continue to perform strongly in all market conditions. I am proud to say that the levels of morale and staff engagement at PGW remain high.”