Saturday, March 30, 2024

Landcorp profit pays dividend

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Greater livestock returns led the way for state-owned farmer Landcorp to achieve a big gain in operating profits.
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Higher dairy prices added to the 15% gain in livestock revenues and the company also booked $8.1 million of income from carbon forestry investments.

The operating profit rose 36% to $48.5m in the year ended June 30, up from $35.6m a year earlier.

The after-tax profit fell year-on-year to $34.2m from $51.9m because of lower gains from valuations on biological assets such as livestock and forestry and a higher tax expense.

Landcorp counts the operating earnings (before interest, tax, depreciation, amortisation and revaluations, known as Ebitdar) as the best indication of overall performance because they represent the ordinary business cashflows, whereas valuation changes are point-of-time figures.

The result was pleasing given the tough climatic conditions during the year, including extreme dry summer conditions in parts of the South Island and a very wet winter in the North Island, chief executive Steven Carden said. 

More work is being done to improve the resilience of the core farming business.

The company is increasingly trading under the Pamu brand name given to its livestock and dairy products.

It will pay a $5m dividend to the Crown on October 15. It is the first payout since a $7m dividend in 2014.

Total revenue for the latest year rose 7% to $247m while operating expenses were largely in line with a year earlier.

The focus was on operational excellence and sustainable growth, Carden said.

As well as the better livestock and dairy prices Landcorp is benefiting from the prices received on its move to premium products and away from commodity items. 

That involves specialty food and fibre products and it is also responding to growing consumer demand for alternative dairy foods like organic, sheep, deer and plant milks.

“We expect our focus on these opportunities will become a greater contributor to our business over time,” he said. 

Landcorp will be pursuing business partnerships for plant production for specialty products. 

In the June year milk premium payments increased by more than $1m on a year earlier, in part because of organic, grass-fed and winter-milk dairy programmes.

A deer milk powder for restaurants was launched during the winter and is receiving positive reviews from the food trade.

A new focus on forestry over the last five years is also providing positive returns, with expansion planned this year.

Landcorp’s full financial details are not released till the annual report is presented to Parliament, usually in October.

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