Record low dairy prices have contributed to a more than $25 million profit plunge for New Zealand's largest corporate farming operation.
Landcorp has posted a net operating profit of $4.9 million for the year to June, down 84% on last year's $30 million.
Milk revenue was down $40.9 million to $88.1 million, which was partly offset by growth in livestock revenue to $111.3 million, up from $98.7 million in 2013 14.
It had been tough for Landcorp and the entire dairy sector so the state owned company's result was ''solid in that context'', chief executive Steven Carden said in a statement.
It might have been even more challenging had the company not secured a ''significant'' volume of supply to Fonterra under its guaranteed milk price scheme at prices that were above the final payout level, Mr Carden said.
Revenue from ordinary activities was down 12% from $241.7 million to $213.5 million. Total liabilities stood at $361.8 million, inclusive of bank borrowings which increased to $210.7 million from $172.4 million.
The company was ''very comfortable'' with its level of debt, which had moderately increased over the past few years to fund dairy conversions on the Volcanic Plateau and complete conversions in Canterbury, based on long term views of dairy payout levels, he said.
The improved livestock revenue was driven by growth in livestock production and higher beef prices. Lamb production had also increased despite an unusually dry summer.
Landcorp's drive towards fixed price supply contracts, particularly for higher value niche products, was gaining positive traction, he said.
''Rather than being dictated to by the fluctuations of commodity price cycles, we're locking in supply deals with partners who can help us maximise the value of what we produce,'' Mr Carden said.
In the medium and long term, the company intended expanding its portfolio into new, high value products.
Last week, Landcorp opened its first sheep milking facility, in the central North Island with joint venture partner SLC Group.
