Release Date: February 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Operating EBITDA increased by 4.7% to $41.4 million, indicating improved business operations.
- Operating revenue rose by $9.4 million to $570.3 million, reflecting growth in sales.
- Profit after tax increased by 25% to $16 million, showcasing strong financial performance.
- Farmer confidence is at its highest level in over a decade, which is positively correlated with PGG Wrightson Ltd's performance.
- The company declared a dividend of $0.05 per share, signaling confidence in future cash flows and profitability.
Negative Points
- Retail and water operating EBITDA decreased by $0.5 million, indicating challenges in this segment.
- The company recorded an operating cash outflow of $31 million, significantly higher than the previous period.
- Interest-bearing debt increased by $9.8 million, raising concerns about financial leverage.
- There is a limited number of dairy properties on the market, which could constrain growth in the real estate segment.
- The weak New Zealand dollar is likely to keep import prices, such as fertilizers and chemicals, at elevated levels, impacting cost structures.
Q & A Highlights
Q: Hi, good morning, Stephen. You mentioned in your presentation about the farmer confidence survey finding farmer confidence at the highest levels in almost a decade. Is there a correlation between farmer confidence and the performance of PGW?
A: The confidence survey has been conducted for about 15 years and is released every six months. There is a strong correlation between farmer confidence, commodity prices, and PGW's performance. However, the survey focuses on rural farmers and does not include horticultural sectors, which can cause some sector differences and timing lags.
Q: It's nice to see the turnaround in confidence. Regarding the return to dividends, does this reflect confidence in sustainability?
A: Yes, the directors have reviewed our forward forecasts and future cash needs, and based on that, we have confidence in resuming dividends, albeit at a cautious level.
Q: I noticed a strongly negative cash flow this half due to seasonal effects. Did the board consider delaying the dividend until the full year to manage cash flow?
A: The increase in working capital, particularly the $24.2 million rise in go stock, has a timing factor related to contract rollovers. We have reviewed these contracts and their cash flow impact, which gave the directors confidence in their decision to resume dividends.
Q: Thank you, that's all from me.
A: Thank you.
Q: Are there any further questions?
A: There are no further questions at this time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
