PGG Wrightson looks to beat operating earnings in 2015

PGG Wrightson [NZX: PGW], the rural services firm controlled by China's Agria Corp, expects to shrug off falling dairy prices and beat its strongest earnings result in several years in 2015 after a strong first quarter.

The Christchurch-based company believes it can increase operating earnings before interest, tax, depreciation and amortisation in the year ending June 30, 2015 from the $58.7 million it reported in the 2014 year, and will update guidance with its first-half result due in February, managing director Mark Dewdney told shareholders in Napier.

"Spring and autumn are the two key periods for this business," Dewdney said. "So, while it remains too early to have high levels of certainty around how the year will play out, and noting the impact in dairy, I’m pleased to advise that based on a strong first quarter, current conditions and performance, we still believe we can increase our operating EBITDA for the current year and better the $58.7 million operating EBITDA achieved in the year to 30 June 2014."

Wrightson beat its own guidance and analyst expectations with its 2014 result after its rural services and seeds and grains unit underpinned the increased earnings.

Dewdney said falling dairy prices will slow the company's forecast revenue from dairy farmers in the current financial year and maybe into the 2016 year, though the outlook for sheep, beef, arable, horticulture and viticulture is positive.

"Confidence in these sectors remains high supported by solid prices, a lower NZ dollar, and, so far at least, generally benign weather," he said. "Growth within these sectors (plus growth in Australia and South America) will continue to be a major focus for the company and should offset some of the weakness in the dairy sector."

Shareholders will today vote on electing John Nichol as an independent director, and re-electing Bruce Irvine and chairman Alan Lai to the board.

Wrightson shares were unchanged at 42 cents, and have gained 7.4 percent this year, outpacing the 5.1 percent increase in the NZX All Index over the same period.

(BusinessDesk)