News

May 07, 2008

PGI Group Is Profitable, But Not Profitable Enough To Set The Market Alight

By Sally White

How can you make money out of the current agriculture boom? No easy question this, from the point of view of the UK stock market with its scant sector representation. Hence the sudden emergence from obscurity of PGI Group, capitalized at £55 million. In theory Asia-focussed PGI Group is hitting lots of the right buttons – production of tea, flowers, nuts and vegetables. Practice is a little different, as creating profits in the developing world is by no means easy. Overshadowing the company is the fear that its tea operations at in the Eastern Highlands of Zimbabwe could be compulsorily transferred by the government to indigenous Zimbabweans.

Operating there is extremely difficult. According to chairman and former Bank of England governor Rupert Pennant-Rea, “general economic malaise and soaring hyperinflation have made it impossible to recruit enough labour. With such severe inflation - officially recorded at 66,000 per cent at the end of 2007 - and large but unpredictable movements in the market exchange rate, it is impossible to track the true financial performance of this business. In the circumstances, it is a great credit to...