New Zealand's Livestock Improvement Corporation sees record NZ$25 million profit

Farmer-owned animal genetics cooperative Livestock Improvement (LIC) in Hamilton, New Zealand reports a record of NZ$25.38 million (U$13.35 million) profit during the first half for the six months to November 30.

 

This is against the NZ$19.09 million earned in the same period of 2008. However LIC says the current second half of the year to May 31 was likely to be a different story.

 

LIC chairman Stuart Bay said the November windfall reflected the market's enthusiasm during the first six months of the season.

 

High international commodity prices last year meant farmers supplying the nation's biggest dairy processor, Fonterra, averaged nearly NZ$900,000 in the payout cheques, based on a payment of NZ$7.90/kg , while farmers at the much smaller Westland cooperative set a national record with NZ$8.29/kg.

 

But with global prices plunging, Fonterra's payout is seen to be closer to NZ$5/kg.

 

Bay said the 2008-09 year "will go down as a game of two halves," with the first six months reflecting the buoyancy dairy farmers were enjoying on the heels of a record payout."

 

The second half of the year however, he says, "will deliver a different result with farmers adjusting their businesses to cope with the reduction in payout".

 

He noted LIC was a very seasonal business with demand for services reflecting activity on-farm, particularly in the spring.

 

Even with last year's good prices, the NZ$19.09 million surplus at six months translated to just NZ$15.63 million for the full year to May 31.

 

Unaudited figures show the November half year had revenue of NZ$105.45 million in 2008, (NZ$89.15m in 2007)

 

The earnings before taxation were NZ$36.36 million after deduction of wages and purchased materials, depreciation and other expenses.

 

Calculated on the NZ$25.38 million profit, the earning per share for the half year were 86 cents.

 

LIC said its balance sheet showed total equity of NZ$182m and an equity ratio of 71 percent.

 

An extra NZ$12m is in long-term assets because of re-valuations of bull and stag sires, and land at May 2008.

 

Return on capital employed continued to improve and for the six months to November 2008 was 13.9, the company said.

 

US$1 = NZ$1.89205 (Feb 13)