Monday, April 22, 2024

Governance disruption ‘in the past’ for PGW

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Focus shifts from boardroom shenanigans to customer service and support.
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PGG Wrightson has put governance issues behind it and is re-focused on delivering the earnings guidance and restoring dividend sustainability, chair Garry Moore says.

The directors want to support senior management and PGW’s 1800 employees in getting on with the business of serving rural people and their needs, without any distraction at board level.

“Times are difficult for farmers and our trading figures reflect that, but there are some green shoots like kiwifruit and apples,” Moore said.

“On-farm financial figures are some of the worst for several decades and the drought conditions in many areas are weighing heavily on farming families.

“That is where our focus has to be – in helping our customers wherever we can.”

Having joined the board as an independent director in 2022, Moore was elected chair on February 16 after majority shareholder Agria Corporation gave notice of proposals to replace three directors with four of its own appointees.

Agria has since withdrawn that disruptive action and its request for a special general meeting.

Moore has a rural background in Mid-Canterbury and a long investment advisory history with the Christchurch branch of Forsyth Barr.

He said recently that all PGW directors should have an appropriate balance of expertise, skills and independence.

With 44% shareholding, Agria has nominated U Kean Seng, based in Singapore, and Meng Foon, the former race relations commissioner and Gisborne mayor.

Moore thinks the right board size is six directors, not the five currently, and that matter will be addressed by the next board meeting in May.

“I think we all agree that Agria should have its appropriate weighting on the board with a couple of representatives,” he said.

“We believe that having an independent, NZ-based chair is a positive,” the directors said after replacing acting chair U Kean Seng.

Elders Australia has grown to a 12.5% shareholding in PGW and has said it is following a geographical strategy.

“We see them as friendly and complementary, especially in procurement matters.”

The PGW share price fell $2 in the past 12 months, $1 of that in the month-long period of Agria aggravation.

After Agria withdrew its action on March 22 the share price rose 15c to $2.20 presently.

Moore said the decline in the share price was a natural market reaction and can be recovered as PGW regains its momentum.

The suspension of dividend payments can be reversed with good cashflow management and the end of the current capital-intensive IT transition.

“When the market sees stability and guidance achievement, a lot of confidence will be restored.”

Moore said the network of nationwide premises is stable and good for business and that young people continue to be recruited into the company.

Saleyards and wool auction rooms are being supplanted with electronic sales channels.

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