Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Landcorp posts 84% annual profit decline; defends debt level

>h3>Landcorp posts 84% annual profit decline; defends debt level
By Tina Morrison

Aug. 27 (BusinessDesk) - Landcorp Farming, New Zealand's largest corporate farmer, posted an 84 percent decline in annual profit as lower milk and lamb prices crimped revenue.

Net profit fell to $4.9 million in the 12 months ended June 30, from $30 million the year earlier, the Wellington-based state-owned company said in a statement. That's in line with its forecast for profit of $1 million to $6 million.

Global dairy prices have slumped over the past year amid higher supplies and weak demand, and lamb prices are also weak following a record Australian slaughter and after a mild winter boosted UK production. Landcorp revenue slipped 12 percent to $213.5 million as a 32 percent decline in milk revenue to $88.1 million was partly offset by 13 percent growth in livestock revenue to $111.3 million driven by increased livestock production and higher beef and wool prices.

Landcorp is focused on securing fixed-price supply contracts for its products, to insulate the farming operation from volatile commodity price swings and gain higher prices. It benefited from Fonterra Cooperative Group's guaranteed milk price scheme which saw it secure higher prices than the final payout level, sold more than a third of its 430,000 new season lambs to UK supermarket company Tesco for its Finest programme of premium meat, and has inked multi-year contracts with Danish slipper maker Glerups and kiwi brand Swanndri through its partnership with the New Zealand Merino Company.

"Rather than being dictated to by the fluctuations of commodity price cycles, we’re locking in supply deals with partners who can help us maximise the value of what we produce," said chief executive Steven Carden. “In the medium and long term we intend to expand our portfolio into new, high-value products. Sheep milk, for example, is a premium product opportunity for Asian markets and last week, with our joint venture partners SLC group, we opened our first sheep milking facility on the Central Plateau."

The company's total assets increased 1.5 percent to $1.77 billion, compared with total liabilities of $361.8 million. Its bank borrowings rose 22 percent to $210.7 million.

Prime Minister John Key and Finance Minister Bill English have said the government is in talks with Landcorp over its debt levels, which have increased as the company undertakes a dairy conversion of the 26,000 hectare Wairakei Estate north of Taupo, for private owners.

Carden said the company had a conservative balance sheet, with low levels of debt relative to its assets.

"We're very comfortable with our level of debt," Carden said. "It has moderately increased over the past few years to fund dairy conversions on the Central Plateau and complete conversions in Canterbury, based on long-term views of dairy payout levels."

Landcorp didn't say if it is paying a dividend to the government.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Commerce Commission: Latest Broadband Report Confirms Improved Performance Of Premium Fibre Plans

The latest report from the Commerce Commission’s Measuring Broadband New Zealand programme shows that the performance of Fibre Max plans has improved substantially. This follows a collaboration between the Commission, its independent testing partner, ... More>>

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>

Commerce Commission: Cartel Conduct Now Punishable By Up To 7 Years’ Jail Time

Cartel conduct can now be punished with a term of imprisonment of up to 7 years, after the Commerce (Criminalisation of Cartels) Amendment Act 2019 came into effect today. Cartel conduct includes price fixing, market allocation and bid rigging (see ... More>>

Stats NZ: Auckland Population May Hit 2 Million In Early 2030s

Auckland’s population may rise from about 1.7 million currently to 2 million by early next decade, Stats NZ said today. “Auckland will likely have the highest average annual growth of New Zealand’s 16 regions over the next 30 years, from ... More>>


Stats NZ: March Card Spending Rebounds Despite COVID

There was a lift in retail card spending in March following a fall in the lockdown-disrupted February month, Stats NZ said today. Seasonally adjusted retail card spending rose by $53 million (0.9 percent), compared with February 2021. Visit our website to read ... More>>

PwC: Outcome Of Review Into Air New Zealand Gas Turbines Business

Air New Zealand has received the report into its Gas Turbines business from independent external advisers PwC. Air New Zealand Chairman Dame Therese Walsh says the report identified a range of effective controls in the Gas Turbines revenue contracting ... More>>

LPG Association: Renewable LPG Achieves Emissions Budgets With No Need To Ban New LPG Connections

Renewable LPG can supply New Zealand’s LPG needs and achieve the emissions reductions proposed by the Climate Commission without the need to ban new connections, a new study shows. The investigation, by leading consultancy Worley, was prepared for the ... More>>