Landcorp cuts loss on better performing dairy

Higher dairy prices have helped ensure Landcorp is on track for a full year profit after cutting its half-year net operating loss by NZ$4 million (US$2.75 million).

Landcorp Farming said the higher income from its dairy division largely offset the impact of lower revenues in sheep, beef and deer, leading to a net operating loss of NZ$6.3 million (US$4.3 million) for the half year after posting NZ$10.3 million (US$7.1 million) in the same period last year.

Dairy income was up by 16% to NZ$39.1 million (US$27 million) but the drag of the higher New Zealand exchange rates saw sheep, beef and deer livestock revenues down 19% to NZ$33.9 million (US$23.34 million).

The company's spending dropped 14% to NZ$72.2 million (US$49.7 million) after last year's high fertiliser, fuel, electricity and feed costs pushed expenditure to record levels in the last six months of 2008.

But Landcorp did warn that some purchasing had delayed until the second half of the financial year to take advantage of current price trends in fertiliser, fuel and other core inputs.

The shifting revenue mix caused by the fluctuating prices would not have an impact on Landcorp's full year profit expectations, according to chairman Jim Sutton.

He said the company expected to report a small operating profit for the full year, even though the source of the revenue was ''significantly different'' from earlier expectations.

Earlier expectations for 2009-10 have been overtaken in recent months by retreating prices for sheep meat, beef and venison but also a recovery in dairy prices. Landcorp's diversification across all sectors positions the company well to ride out such volatility, and thereafter benefit from longer-term growth in world demand for protein foods, said Sutton.

The company said stronger pasture growth in most regions and continuous improvement in herd management practices had seen a slight rise in milk production, but that many of Landcorp's breeding flocks and herds were still recovering from the effects of the severe drought in 2007-08.