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December 18, 2008

 

NZF expects loss on falling milk prices
 
 

New Zealand Farming Systems (NZF), which is developing dairy farms in South America, may post a full-year loss of up to US$11 million due to a sharp drop in world milk prices.

 

The company expects its full-year loss before EBIT to range between US$7-11 million.

 

Last year, the company had a pretax loss of US$7 million.

 

The company had expected milk prices to fall below 30 US cents per litre, but revised it down after Fonterra's online auction for whole milk powder ended at about 20 US cents per litre.

 

The company's targets are achievable once the South American farms, including irrigation, are fully developed, said chairman Keith Smith, adding that prices will start rising once the market hits rock bottom.

 

New Zealand's agricultural provider, PGG Wrightson said it would write down its 11-percent stake in Farming Systems.

 

NZF's earnings may also be hurt by a dry November that was expected to knock down milk production to 50-60 million litres from the projected 60-70 million litres.

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