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Porirua, New Zealand
August 22, 2002
The Wrightson Group has
continued its strong improvement in performance, with earnings
before interest and tax (EBIT) increasing 53 per cent from $20.7
million last year to $31.7 million for the year ended 30 June
2002.
This resulted in net profit after tax nearly doubling,
increasing from $10.7 million last year to $21.2 million.
Wrightson Chairman John Palmer, said it had been a year of
excellent financial performance by the Group, adding
considerable economic value, while its commitment to building a
Solutions-based business had begun to realise financial and
operational gains.
"The favourable sector conditions provided a solid foundation
from which to make further progress towards Wrightson’s twin
goals of reducing its exposure to changes in the commodity cycle
and exchange rates, and producing more sustainable earnings",
said Mr Palmer.
"Strategic investments such as implementing best practice
logistics in the Rural Supplies business are now largely in
place, and will begin to realise benefits in the coming
financial year."
Mr Palmer said Wrightson is successfully moving from an
essentially commodity driven, transaction-based business to a
customer Solutions business across all facets of its operations.
Wrightson will pay a final dividend of 8 cents per share,
giving a full year, fully imputed, dividend of 11.5 cents
(compared with 8 cents last year). The dividend represents 73
per cent of net profit after tax, and Mr Palmer said this
reflected the Board’s confidence in the Company’s performance
over the year ahead, and its ability to sustain shareholder
value and tax-efficient returns.
Key financial highlights of the year included:
- The Group’s Economic Value Added (EVA), more than doubled
from last year, increasing from $2.7 million to $7 million
(unaudited). Wrightson places strong emphasis on this measure
of shareholder wealth creation, and considers it a key
indicator of business performance.
The EBIT result was achieved after $4.6 million of
strategic expenditure on several initiatives, including
Solutions development, the alliance with biotechnology partner
Genesis Research and Development Corporation, Rural Supplies
logistics implementation, and the investment in a strong wool
marketing concept company, OneWool. Such investments provide
the strategic foundations for the future, as well as
competitive advantage for clients and for the Company’s
business growth.
The New Zealand operations’ after tax profit of $18.1
million was seven per cent above last year, reflecting a
strong year for Seeds and Agri-feeds in particular, and an
improved performance from Livestock. Adjusting for unusual
items incurred last year, and strategic investments this year,
underlying New Zealand after tax profit improved 13 per cent.
The Australian net profit after tax of $3.3 million was a
substantial improvement over the underlying result last year
of $0.2 million. This reflected a focus on improving revenue,
and on lowering costs.
The loss in Uruguay was reduced from $1.2 million last
year (before the goodwill write-off) to $0.2 million.
Expenditure was contained as a result of reduced costs in
Australia, Uruguay and the Wool business, and the absence of
unusual write offs and costs experienced in past years.
Cash flow from operating activities was $25.4 million for
the year compared to $14 million last year, and Wrightson’s
balance sheet remains strong with no term debt.
Mr Palmer noted that Wrightson retains a very conservatively
geared balance sheet and is well positioned to maintain a high
dividend payout ratio, and to consider growth opportunities in
support of its Solutions and cost leadership business
strategies.
Managing Director Allan Freeth said that operating conditions
in New Zealand and Australia had been generally positive
throughout the year for the majority of clients, and
consequently for Wrightson.
"Within this favourable environment, Wrightson was able to
address costs and advance its strategic initiatives", he said.
Of these, Dr Freeth said the Rural Supplies logistics project
is critical to achieving cost leadership in the distribution of
products and services to clients.
"Wrightson is well advanced with building a logistics
operation that matches best practice in the industry. This will
significantly improve the way product moves from Wrightson’s
many suppliers to its network of 77 stores, and from stores to
clients," he said.
Wrightson is also making solid progress with its Solutions
Strategy, and this is reflected in financial returns that are
building and making progress towards the goal of 30 to 40 per
cent of Group revenue, which has been set for the Solutions
Strategy by 2005.
"Our Solutions Strategy means looking outside the boundaries
of the Company’s traditional services to build business growth.
It means the development of tailored Solutions for different
farming sectors, districts and clients; all focused on helping
clients improve their productivity and profitability, or to
access markets for their products," said Dr Freeth.
"Examples include elite pastures, whole farm systems, and
wool and livestock supply and marketing options. Others under
development include Solutions focused on environmental
sustainability, methane mitigation, and energy auditing".
Dr Freeth said that Wrightson’s strategy for building its
business is based on continuing the drive for leadership in
agriculture and the continued development of its Solutions
Strategy.
"Wrightson intends to increase its sustainable earnings
stream, reduce costs, continue to differentiate itself from the
competition, and improve market share," he said.
Wrightson has a positive outlook for New Zealand’s rural
sector for the next 12 months, and although it sees a
significant decline in incomes for dairy farmers, and to a
lesser extent, sheep and beef farmers, the outlook is positive
relative to average incomes during the 1990s.
Mr Palmer said that this environment means a progressive
business outlook for the Group.
Company news release
4772 |
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