Landcorp more than doubles profit

Fertiliser is applied to Landcorp's Waitepeka farm in South Otago. Photo by ODT.
Fertiliser is applied to Landcorp's Waitepeka farm in South Otago. Photo by ODT.
State-owned Landcorp Farming has more than doubled its profit for the June year, with dairy production expansion contributing to the strong result.

The country's largest corporate farming operation has posted a net operating profit of $30 million, up from $13 million the previous year, and will pay the Government a $7 million dividend, a $2 million increase on last year.

Total revenue from operating activities increased 37% from $176.7 million to $241.7 million, while high dairy prices and expanded production increased milk revenue by 70% to $129 million.

Earlier this month, Landcorp slashed its profit forecast for the year to June 2015 from $20.5 million to between $8 million and $12 million, reflecting the drop in Fonterra's forecast milk price to $6.

The company produces about 18,000 tonnes of milk solids a year.

In a statement yesterday, chief executive Steven Carden said various business decisions taken in 2013-14 meant the company could approach the coming year with confidence, despite the prospect of lower prices.

The company was focused on initiatives to raise productivity and efficiency across its operations.

It had strengthened its productive capacity and secured economies of scale through new partnerships with landowners, introduced a new farm management software system, and a companywide initiative to reduce to reduce costs and streamline decision-making at the farm level.

It had also made solid gains in feed production per hectare and had achieved a 10% lift in dairy production, Mr Carden said.

Despite the bottom-line impact of the projected fall in milk prices to 2014-15, the company was ''well placed'' to continue to record sustainable profit growth over the medium term.

In the medium and long-term, Landcorp would be ''taking significant steps'' to reduce its exposure to commodity price cycles.

That meant maintaining a diverse portfolio of species farmed, including a renewed emphasis on expanding red meat production, which would involve collaborating with other farming groups.

The company planned to ensure its products were targeted at niche markets where it could have a direct relationship with the customer, he said.

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