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LIC posts half year result


10 February 2016

LIC posts half year result


Livestock Improvement Corporation (NZX: LIC) has announced its half-year result for the six months ended 30 November 2015.

LIC total revenue for the six month period was $145 million, 9 per cent down on the same period last year. Net profit after tax (NPAT) was $15.9 million, down 46 per cent from the previous year.

LIC signalled reduced earnings in October (NZX, 20 October 2015), as a result of the lower forecast milk payout and reduced spending on-farm.

It is now expected that the year-end result will be closer to a break-even position, chairman Murray King said.

“The season’s lower forecast milk price has created challenging financial situations for many dairy farmers, and as a co-op we are closely linked to that.

“This result is a reflection of that, and as we continue our essential capital expenditure programme; it is very much in line with what we anticipated in October although we now expect the year-end result to be closer to a break-even position.

“We continue to actively manage and minimise costs, without impacting our service to farmers. It’s times like this when service becomes even more important, so we are hugely focussed on that. We have made significant reductions in our operating costs over the last six months and these will be sustained through the rest of the year.”

LIC has continued to invest in its information systems, to enable improved service delivery as well as faster development of new innovations, to help farmers make real-time decisions and to add value on-farm. This is reflected in the lower NPAT, from increased depreciation costs.

King said the artificial breeding (AB) season remained relatively strong, with the co-op supplying genetics to breed over three-quarters of the national herd.

“As expected we have seen farmers revise their budgets, but most were still willing to invest in solutions that will deliver a return for their business, and the herd improvement services we offer are key to that.

“We focussed on providing top quality and good value genetics, software and farm automation offerings to farmers.”

Summary, Half Year Result
LIC revenue and other income for the six months to 30 November 2015 was $145 million, 9% down on the $159 million achieved during the same period in 2014. Net profit after tax for the half year was $15.9 million, down 46% from the previous year.

LIC’s business, particularly artificial breeding (AB), is highly seasonal. Half year results incorporate the majority of AB revenues but not a similar proportion of total costs, and are therefore not indicative of the second half, nor the full year, result. No dividend is therefore declared at half year.

LIC continues to operate a strong balance sheet with total assets including cash, software, land and buildings and bull teams of $371 million. Cash flows from operations were a negative $17 million reflecting extended terms given to farmers to assist their on farm cash flows. This compares to cash flows from operations of $6.6 million in the half year to 30 November 2014.


ENDS

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