This year’s sale to multinational MSD Animal Health realised net $24m, received after the balance date, and the board is now considering the use of these funds.
Shareholders may be expecting a special dividend as the FY2021 dividend was no improvement on the year before despite the lift in net profit.
LIC chair Murray King says that was a result of the dividend policy being 80% of underlying earnings, which were down slightly to $22.3m after a one-off tax benefit in the prior year.
Underlying earnings excluded bull valuation, nil paid share valuation movements and any gain from the automation business divestment.
That dividend expectation would be reflected in the recent share price history, up 57% in the past 12 months to $1.21 currently.
The price has risen 30c since early March, most of the gain ahead of the divestment announcement in early June.
LIC will return $17.8m in dividend to shareholders, which equates to 12.51 cents a share.
The fully imputed dividend is a 14.4% gross yield based on the current share price and will be distributed on August 20.
LIC has 127m shares issued and a current market capitalisation of $153m.
King says dairy farmers were responding to the refocusing of LIC to its core business as a modern, progressive co-op, especially in purchasing premium genetics.
“Young, genomically-selected bulls are used to fast-track genetic gain and deliver more value on-farm through increased productivity and efficiency, including improved environmental efficiency.”
Combined with the dividend payments, this was a win-win for farmers.
Premium genetics now accounted for 41% of all AB inseminations, being 1.79m out of 4.3m semen straws, more than double the rate three years ago.
Most of the premium straws purchased were from the Forward Pack or A2/A2 bull ranges.
That included sexed semen, which accounted for 110,000 straws, three times the previous year.
The number of traditionally daughter proven bulls used for AB continued to decline, now down 40% from three years ago.
That shift reflected growing confidence in LIC’s genomic work and the adoption of new tools and solutions for farm sustainability.
“We have invested heavily into genomics for our farmers because the DNA of our dairy herd can do a lot of the heavy lifting to help meet our sectors’ climate goals,” he said.
“World leading pastoral dairy genetics and genomics are a much more precise tool for farmers than the blunt instrument of reduced cow numbers.”
LIC was working with the NZAEL subsidiary of DairyNZ to include genomics in future animal evaluations to support the national breeding objective.
In the financial year, herd testing was up 7.3% and animal health testing up 23.9%, primarily for Johne’s disease and milk pregnancy testing.
International exports were up 23% by value after some initial challenges getting product to market due to covid-19.
Expenditure on research and development was up 15% to $17m, plus $3m on improvements to MINDA LIVE herd management system.
The board is recruiting a new chief executive after the decision of Wayne McNee to stand down in November.
It expected underlying earnings to be in the range $19m to $25m in the current financial year.
