Wrightson cuts profit forecast on real estate, economic downturn
Dec. 17 – PGG Wrightson Ltd., New Zealand’s biggest rural services company, cut its profit forecast, citing a loss at
its real estate business, the economic downturn and a writedown of its stake in NZ Farming Systems Uruguay.
Profit in the year ending June 30 is likely to be in a range of NZ$39 million to NZ$45 million, the company said in a
statement. That’s down from the NZ$46 million to NZ$51 million forecast range it gave shareholders at their annual
meeting in October. The shares fell 0.6% to NZ$1.59.
“The real estate business is performing as well as could be expected in extremely difficult conditions, with continuing
growth in market share and substantial cost reductions,” the company said. The operating performance of most of the
group’s other businesses “remains strong despite the difficult economic environment” and the company has not yet seen
any impact from farmers of the drop in commodity prices, it said.
New Zealand’s economy will shrink 0.2% in the 12 months ending March 31, the weakest since 1992 on a slump in housing
and rising unemployment, according to a survey by New Zealand Institute of Economic Research, released yesterday.
Economists in the survey cut their average estimate from the growth of 0.2% they were predicting three months ago. The
economy will resume its expansion in 2011, with a 3% annual pace, according to the survey, posted on the NZIER website.
Wrightson’s reduction in forecast profit would still represents a gain of as much as 15% on last year’s NZ$39.2 million
earnings.
The performance of its real estate business is now expected to be NZ$11 million below last year. Total farm sales for
the year to date are 39% below the same period in 2007.
This year’s earning will also reflect costs associated with the termination of its agreement to buy a half stake in
meat company Silver Fern Farms, it said. It will also mark to market the value of interest rate hedges.
In October, Wrightson said it was unable to settle the NZ$220 million acquisition of a half stake in Silver Fern Farms
because of the global credit squeeze.
(Businesswire)
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