Sheep farmers experiencing soft export demand and weaker commodity pricing, PGW said. Photo: RNZ / Nate McKinnon
The economic slide and weak commodity prices have slashed the full year profit of rural services company PGG Wrightson (PGW).
Key numbers for the year ended June compared with a year ago:
- Net profit $3.1 million vs $17.5m
- Revenue $916m vs $957.7m
- Operating earnings $44.2m vs $61.2m
- Final dividend nil vs 10 cents per share
PGW chair Garry Moore said weak trading for its farmer clients, especially for sheep farmers, had flowed through to the company, resulting in a 82 percent slide in profit.
"PGW prospers when our farmer and grower customers do well. Our customers have faced difficult conditions over the past year and consequently this has impacted our results."
He said PGW had done well to increase market share, but farmers and growers had been cutting back and deferring discretionary spending.
"Most of the agri-sector has been impacted, some have been harder hit with sheep farmers experiencing soft export demand and weaker commodity pricing and the rural real estate market has been going through a particularly quiet period," Moore said.
Profitability across all businesses fell, with its main Retail and Water division's earnings down 7 percent from the previous year, the agency division's earnings down 23 percent as livestock and real estate sales slowed, and wool prices were stable.
Moore said the agricultural sector was facing a challenging outlook with only moderate growth and subdued demand expected.
"Commodity prices remain relatively volatile and underpins a cautious approach from growers and farmers."
"Geopolitical tensions are contributing to volatility. A slower than expected recovery of the key Chinese export market continues to dampen commodity price expectations," he said.
He said easing inflation and interest rate cuts would help, in due course, to lift demand, but given broader uncertainty the company did not make any earnings forecast.