PGW’s profit up, earnings down

Operating earnings before interest, tax, depreciation and amortisation (EBITDA) was $70.2 million (up 9% from $64.5m last year) and net profit after tax (NPAT) was $18.9m (down from $46.3m).

The company declared a fully imputed dividend of 1.25c/share, to be paid on October 3, bringing the total for the year to 3 cents per share.

PGW deputy chairman Trevor Burt said the company had warned net profit would be down because the 2017 NPAT had benefited from the sale of property, while this year’s had been affected by one-off non-trading items, e.g. historical liabilities under the Holidays Act.

However, Burt pointed to a significant increase in operating EBITDA, and to a match of 2016’s record result. 

“In October 2017 we targeted a range of $65 to $70m and we exceeded the top end of that,” he says.

“[The dividend balances] the one-off nature of these items affecting NPAT and the strong underlying trading performance against the reinvestment opportunities available to the business. 

“We felt it prudent to reduce the final dividend this year.”

Chief executive Ian Glasson called it an excellent trading result which PGW could be proud of. 

“Almost all our New Zealand businesses were up on last year, with most achieving double-digit earnings growth, despite our seed and grain Australian and South American businesses facing challenging climatic conditions. 

“However, NZ agriculture was strong in FY2018 and our trading result reflects our broad exposure to NZ agriculture and our passion and commitment to the sector.”

Glasson noted that the agency group -- rural livestock, export livestock, wool, insurance, real estate and finance -- delivered a record result, with operating EBITDA up 12%.

The livestock division repeated 2017’s performance with the effects of higher sheep prices offsetting fewer dairy transactions. 

“Wool achieved excellent results with volumes returning to more normal levels on a lift in underlying wool prices.

“The retail and water group also achieved a record result with operating EBITDA up by $5.5 million or 30%.”

Meanwhile, the seed and grain group, being sold to the Danish seed giant DLF Seeds, was down 4% to $35.6m. 

Glasson says the NZ business was the standout performer for seed and grain during FY2018, with strong sales volumes not quite enough to offset the impact of extremely dry conditions in South American and Australian markets.