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Allied Farmers first-half profit drops 71%

Allied Farmers first-half profit drops 71%; slower livestock sales expected to persist

By Paul McBeth

Feb. 22 (BusinessDesk) - Allied Farmers posted a 71 percent drop in first-half profit and said slower livestock sales in the immediate wake of a dairy price recovery that contributed to the decline are likely to persist.

Net profit attributable to shareholders fell to $83,000, or 0.05 cents per share, in the six months ended Dec. 31, from $281,000, or 0.17 cents, a year earlier, the Hawera-based company said yesterday. Revenue rose 6.6 percent to $10 million while the addition of new livestock agents to expand that business boosted employee costs 17 percent to $3.4 million.

"The core livestock business performed well, with turnover up 11 percent on the prior year’s first half and livestock commissions up by 5 percent," chair Garry Bluett said. "However, the costs of expanding the operations in Northland and South Island meant that there were costs incurred that have yet to show full returns."

Allied Farmers has been focusing on its livestock division, having largely wound down the residual assets from its acquisition of the Hanover and United Finance loan books in 2009.

Bluett said forward dairy herd sales are tracking behind last year and warned last year's "high volume" of sales might not be repeated.

That "would have a material negative impact on the full year result," he said. "The directors and management are watching closely the consequences of the mycoplasma bovis outbreak and the impact that could have on the company's operations."

Allied Farmers didn't quantify its share of a settlement with PwC stemming from litigation against the former directors and advisers of Property Ventures Ltd. The rural services firm is a beneficiary of the action having sold various loans to a unit of the suit's funder in 2013.

The shares were unchanged at 10.2 cents and have gained 6.3 percent so far this year.



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