Landcorp Farming doubles profits to $30m

By: Media Release

Landcorp Farming has recorded a net operating profit of $30 million for the year ended 30 June 2014, up from $13 million from the previous year.

Total revenue from operating activities increased 37% to $241.7 million, which reflected a recovery in prices as favourable weather boosted production volumes for dairy, sheep and beef products.

Landcorp’s expansion of dairy production across the country combined with record milk solid prices contributed to the strong performance.

Landcorp CEO Steven Carden said various business decisions taken in 2013/14 meant that the state-owned enterprise could approach the coming year with confidence, despite the prospect of lower prices.

"We’re very focussed on initiatives to raise productivity and efficiency across our operations.

"We have strengthened our productive capacity and secured economies of scale through new partnerships with landowners like the Hauraki Collective, introducing a state of the art Farm Management software system, and a company-wide initiative to reduce costs and streamline decision-making at the farm level."

Landcorp’s total shareholder return (or comprehensive income) was $115.9 million compared with a $1.5 million loss the previous year. The increase was mainly due to a $36.7 million unrealised gain in the market value of livestock and a $67.6 million revaluation gain on land and improvements.

High dairy prices and success with partnerships for expanded production increased milk revenue by 70% to $129 million.

Meanwhile, Lancorp’s expenses for 2013/14 increased 15% to $207 million due to the commencement of the sharemilking arrangement with the Shanghai Pengxin Group and expansion of the Wairakei Pastoral Dairy conversion program.

Purchased feed also increased as Landcorp increased production to exploit high forecast milk prices and to offset the effect of the dry conditions experienced in the North Island in early autumn.

Mr 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.

He added: "In the medium and long term, we will be taking significant steps to reduce our exposure to commodity price cycles. In part, that means maintaining a diverse portfolio of species farmed – including a renewed emphasis on expanding our red meat production in our lamb, beef and venison categories."

Landcorp is a state owned enterprise and New Zealand’s largest corporate farmer. It owns or manages 137 dairy, beef, sheep and deer farms from the Far North to Southland.

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