Landcorp 2013 profit probably higher than forecast as it mitigates drought impact
By Tina Morrison
Aug 9 (BusinessDesk) – Landcorp Farming, New Zealand’s biggest farmer, says earnings may be a smidgen higher than first budgeted after initially thinking it may only breakeven this year when drought hit milk production and livestock price.
Net operating profit was probably $13 million in the year ended June 30, compared with its original budget of $12.7 million and down from $27 million the year earlier, state-owned Landcorp said in a statement
In January, the company, which operates 119 properties, cut its earnings expectations to between $6 million and $8 million and in March said it may only breakeven as the worst drought in 70 years crimped production and hit prices.
However in June its earnings expectations started to rise to about $10 million as the impact of the drought was effectively managed and mitigated where possible by keeping a lid on costs and through some unexpected one-time gains.
Still, Landcorp says the drought is likely to cost it at least $11 million in lower milk and livestock production and increased costs to purchase feed.
Its annual dividend to the government will probably be cut to $5 million, down from its original budget of $42 million and last year’s payment of $20 million, reflecting the impact of the drought and higher than expected debt levels, the company said.
Total shareholder return, which includes the drought impact as well as falling livestock values and static farmland values over the past year, would probably show a loss of about $1.5 million, the company said.