Rural services company PGG Wrightson’s (PGW) net profit leapt 41% in the first half of the current financial year to $18m – up from $12.8m for the same time last year.
The company has just reported a gross profit of $56 million, a 33% rise over the previous year for the year ending June 30 2021. Net profit for the year jumped $15m to $22m.
PGW's chief executive Stephen Guerin told Rural News that the company's retail, horticulture, livestock, wool and real estate businesses all contributed strongly to the results.
"Firstly, I want to acknowledge the support and work of our staff in achieving this result," he says. "It was a challenging year to deal with lockdowns and Covid, and our team responded magnificently."
Guerin says low interest rates and strong demand have fuelled the rural property market, which delivered this division the best profits in over a decade. He says PGW's agency business, which includes commissions from its livestock, wool and real estate businesses, quadrupled net profit to $15.1m in the year to June 30.
"The real estate business has seen particularly strong demand across all sectors of the rural property market, which has also been fuelled by low interest rates," Guerin said. "This resulted in the real estate business experiencing its best returns in over a decade."
He put the good real estate result down to buoyant agricultural commodity prices and record low interest rates.
Meanwhile, Guerin describes results for PGW's livestock business as mixed, which he says was greatly influenced by the weather.
"The South Island achieved a solid result, especially within the sheep and beef sector," he says. "The good rains in December 2020 saw good grass growth and buoyant livestock trading."
However, Guerin says the North Island was a lot tougher - with fewer animals around due to drought.
Meanwhile, Guerin belives the outlook is positive in the rural sector with strong farmgate and commodity prices.
"Notwithstanding the fact that many of our farmer clients are challenged by the regulatory changes they are facing the confidence is there," he told Rural News.
"Demand is expected to continue for lamb and sheep meat, and cattle prices are anticipated to remain high.
"There is also confidence in dairy with a positive outlook into next year and a solid payout predicted," he says.</p.
The PGW board has declared a fully imputed final dividend of 16c/share, to be paid in October. This takes the full year dividend to 28c.