The company gained $134m from the sale of its seeds business to a Danish firm. - Photo: Facebook / PGG Wrightson
The country's biggest rural services company PGG Wrightson has reported a sharply higher profit on the back of the sale of a large part of its business.
The company's net profit for the year ended June was $131.8 million compared with $18.9m the year before.
However, the result was boosted by a gain of $134m from the sale of its seeds business to a Danish firm.
Leaving aside the one-off gain the operating profit was down by nearly a third to $24.4m, as the slowing economy flowed through to farmer spending.
"Farmer confidence in parts of the agriculture sector remains subdued, constraining farm spending and therefore our revenue growth over the year," chairman Rodger Finlay said.
"This has also been evident in recent months with a discernible tightening in the credit environment. This has seen a small increase in our overdue debtors and increased provisions taken at year-end for doubtful debts."
PGG Wrightson is now largely a New Zealand-focused business with rural supplies, livestock and wool trading, and real estate says it remains a significant business even with the sale of its seeds business.
Mr Finlay said its livestock business has suffered from the impact of the M Bovis, but it was benefiting from the growth and development of horticultural land. However, farmers were being much more cautious about their spending and investment.
He said the company has looked at its structure after the sale of the seeds division, and is making changes to improve efficiency, which should deliver $2.5m in savings in the coming year.
The company expects to make an operating profit of more than $30m this year.