Beijing, China
May 14, 2013
Agria Corporation (NYSE: GRO) (the "Company" or "Agria") today announced that its New Zealand-listed subsidiary, PGG Wrightson Limited (NZX: PGW) ("PGW"), has provided an earnings guidance update.
Earnings before interest, tax and depreciation ("EBITDA") for the financial year ending June 30, 2013 is forecast to be in the range of NZ$48 - NZ$40 million compared with NZ$55 million in for the corresponding period last year.
The three main factors contributing to the change in EBITDA have been climatic conditions across Australia and New Zealand, lower livestock values and when compared to the last financial year, less earnings from Agri-feeds post disposal to the 4Seasons Feeds Limited joint venture.
Mr. Alan Lai, Agria's Executive Chairman of the Board, commented, "We note that PGW will record somewhat lower EBITDA this year, but we believe this is only a temporary setback due to weather and other conditions outside of our control. We remain optimistic about the long-term outlook for PGW and Agria. We are committed and focused on building a durable franchise and institution that can thrive in strong climatic and weather conditions, but can limit the downside in adverse conditions as we continue to build our business in different geographies around the globe. We expect to both grow quickly and reduce the volatility in our results."
PGW Managing Director, Mr. George Gould, said climatic extremes in Australia with two record wet years followed by record-breaking high temperatures this year have frustrated the company's efforts to build earnings. Consequently, the Australian seed business, whilst important to the group strategically, is not forecast to contribute significantly to earnings this year.
Climatic conditions in New Zealand have also been a factor with the whole of the North Island and much of the South Island in one of the most extensive droughts on record.
Mr. Gould cited that the New Zealand drought has impacted its farmer clients' spending power and impacted livestock prices. The company said that livestock values have been in decline since the beginning of the current financial year, first in sheep and later on with beef, deer and dairy. While volumes and market share remain solid, prices have declined approximately 30% compared with last year, which is expected to have a material impact on PGW earnings for the financial year ending June 30, 2013.
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