The company taking New Zealand dairy farming technology to Uruguay has had its bottom line hit by plummeting dairy prices and drought, and said it was on the hunt for more capital.
New Zealand Farming Systems Uruguay yesterday reported an $NZ18.6 million loss in earnings before interest and tax (Ebit) for the six months to December 31, compared with $19.4 million for the same period last year, despite a 147% increase in revenue from $5.5 million to $15.7 million.
Chairman Keith Smith said the worst drought in 30 years created extra costs in supplementary feed of nearly $600,000 a month, and affected milk production.
The operating cash deficit was $30 million, due to lower milk prices, which fell from 78c a litre last season to 37c a litre, reduced milk production, extra feed costs and seasonal expenses.
Mr Smith said while $31 million in loans had been raised from Uruguayan banks, additional money was being sought to complete the conversion of land to dairy farmland rather than retaining a land bank.
To complete the conversion would cost between $156 million and $176 million, with some of that money needed by June.
If that extra funding could not be found, Mr Smith said the company would consider disposing of some farms to generate cash.
Looking ahead, Mr Smith said the annual result was likely to be at the higher end of an expected Ebit loss of between $13.7 million and $21.5 million.
