August 27, 2014

Landcorp's operating profit surges amid increased dairy sales

New Zealand's Landcorp posted NZD30 million (US$25.14 million) of operating profit during the 12 months that ended June 30, a surge of 133% compared to NZD13 million (US$10.89 million) of last year.

Sales of the company's products rose by 37% to NZD241.7 million (US$202.52 million), of which, revenue from milk soared 70% to NZD129 million (US$108.07 million). Net profit skyrocketed 402% to NZD54.7 million (US$45.81 million), allowing the company to raise dividend payment by 40%.

The company's costs rose by 15% to NZD207 million (US$173.38 million) in the period, as a result of its share-milking agreement with Shanghai Pengxin Group and the expansion of its dairy conversion programme in the Waikato.

The state-owned company benefited from surging dairy prices in the reported period. However, the high prices will not be sustained in the current year and Landcorp forecast that operating profit will fall to NZD8 million (US$6.70 million) to NZD12 million (US$10.05 million) in 2015.

CEO Steven Carden said, "Despite the bottom-line impact of the projected fall in milk prices for 2014/15, Landcorp was well placed to continue to record sustainable profit growth over the medium term."

Carden added that the company aims to reduce the exposure to commodity price cycles by widening the range of livestock farmed and increasing its focus on red meat production of lamb, beef and venison. "We also plan to ensure our products are targeted at niche markets where we can have a direct relationship with the customer," he said.