The farmer-owned co-operative made an after-tax $2.8 million profit from $2.55 billion turnover for the last year ending June to reverse a previous loss.
Another profitable result appears likely, despite farmers facing a mixed bag of higher fuel prices and farm inflation, offset by high red meat returns, another good dairy payout and Fonterra shareholders taking an average $400,000 from the $4.22b Mainland Group sale.
Farmlands announced in March that revenue was up 10% in the first half of the year and earnings before interest, tax and other deductions rising 19% year on year.
Chief executive Tanya Houghton said the accounts were still being prepared, but the co-op’s performance was looking good in spite of having to manage volatility in the marketplace.
Farmlands would be more than a $2.55b company by the close of this month, she said.
"I would say at this stage we are continuing to perform in line with what we said at the half result. I’m expecting us to have a pleasing result."
Farmers were feeling quietly confident, despite cost pressures from the Middle East conflict, she said.
The Ministry for Primary Industries’ outlook report showed the sector was doing well with some squeeze going on farm margins from higher costs, she said.
"There is an expectation there won’t be any shortages of product, but price will be an issue, whether that be fert, fuel or the natural flow on you see from those products into many other products. So, cautiously optimistic, but it is a volatile situation."
Among its many interests, Farmlands is investing further in Donaghys, a business of 60 staff moving from a small rope-works factory in Dunedin in 1876 to animal health, crop protection and dairy hygiene innovation and manufacturing.
The co-op took on its animal health, agri-chemical and dairy shed products and services, as well as its laboratory and manufacturing site in Dunedin and office in Christchurch last April.
Since then, the co-op has invested in the business with new lab machinery and is about to launch a new product in August.
A lab upgrade started by Dongahys is about half way to completion.
Chief executive Jarred "Jed” Marfell said customers would notice little change during the peak selling period, but behind the front desk, progress was being made.
"We have already had some early wins, which is great, and Farmlands have already signed off some capital expenditure which was identified as an opportunity in our laboratory with more lab equipment."
Another development had been the registration of a sheep spot-on product which treated internal parasites with future claims expected to include lice control.
Using a different active ingredient than a product already on the market, an initial trial showed it was efficient on lice — a problem for merino wool quality.
Sales would start with a soft launch in August, he said.
About $120,000 was being invested in new lab equipment to test raw materials and finished goods.
"We have one unit at the moment and by adding a second unit we will be able to release product quicker into the market because some tests take two to four days to process and that will speed this up and also speed up our research and development programme."
Mrs Houghton said the co-op wanted to make sure equipment was available to build up its research and development and continue to invest for farmers.
"So there will be a new lab, a great team that are in there and also additional equipment that will allows us to bolster our R&D programme."
Farmlands wanted to expand the range with new products from buying patent registrations or reverse-engineering existing products.
Over the next year, market innovations and opportunities were being identified as well as solutions for the needs and challenges of farmers, she said.
Farmlands has just negotiated a partnership with Dunedin-based Techion for its FECPAK digital animal diagnostics.
Mrs Houghton said the animal health testing range fitted in with Donaghys product range.
Staffing is unlikely to increase initially, but may in the future as the programme expands.
The lab is open 16 hours a day under two shifts to also test products made in the Dunedin factory.
Mr Marfell said a range of technology was being developed for the market in animal health, hygiene and crop protection.
Twelve new projects were in a development review for the next three years, he said.
Donaghys exported its patented nitrogen booster for pasture and crops, N-Boost, and there was scope to increase exports among the product line.
Mrs Houghton said Farmlands had invested in Donaghys for growth and increased production in the factory.
The co-op would likely acquire more companies in the future, she said.
"Now we are looking at acquisitions which really help us move to the vertical supply chain, and both of the acquisitions with Seales Winslow and Donaghys are long-term NZ businesses with NZ-based manufacturing and product development that are key to NZ farmers."
Donaghys is celebrating 150 years this year.
