Record South American milk prices delivered New Zealand listed NZ Farming Systems Uruguay a better than forecast $US1.6 million ($NZ2.28 million) after tax profit, despite rising production costs, a wet winter and summer drought.
Shares in NZFSU remained unchanged yesterday at $1.80.
The chief executive of the start-up dairy company, Andrew Clark, said a "buoyant" outlook would prompt NZFSU to likely undertake more capital raising before the end of the year.
Milk prices rose during the year, with Uruguay's major processor paying US40c per litre.
However, this prompted an increase in land prices and NZSFU subsequently accelerated its land purchase programme, he said in a statement yesterday.
NZFSU went to Uruguay as purchasing land and conversion to dairying was estimated at up to quarter the cost in New Zealand.
During the past year to June, NZSFU had spent $US84 million and had 36,000ha with 12,000ha in production, 50,000 livestock including almost 6000 in the milking herd, which was expected to more than double to 14,000 within a year, and 11 milking sheds spread over several provinces.
Mr Clark said a priority had been building the herd of dairy cows and heifers, while regrassing and redevelopment of 22,000ha was under way.
When NZFSU listed in December 2007, it had a total war chest of $NZ254 million from private, institutional and public investors, with listed PGG Wrightson, the founder and asset manager, retaining a 20% stake.
During the coming year, NZFSU will pay PGG Wrightson a performance management fee of about $US13.6 million ($19.4 million), based on asset value and share price performance, which in a year drops from 1.5% to 1%, leaving NZFSU carrying a more than $US5 million deficit.
ABN Amro Craigs broker Peter McIntyre said NZFSU was a "medium risk" investment and reliant on commodity prices, which in turn affected asset values such as land.
He noted that for present investors, the share issues of $1 and $1.50 had risen in value by as much as 40%, with the price at $1.74 at June.
Mr Clark said in the short term South American prices would "remain at current levels" and, despite expectations of prices eventually easing, in the medium to long term they would be "materially higher" than recent prices.
NZFSU director David Cushing is stepping down to pursue other commitments.
