Landcorp records sharp drop in profits

HAMISH RUTHERFORD
Last updated 13:53 31/08/2012

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Landcorp, the state-owned farming company is warning of lower farm gate prices as it revealed a sharp fall in profits, which are forecast to halve again in the coming year.

Wellington-based Landcorp owns or leases 376,000 hectares on 122 farms throughout the country. Almost 600 staff looking after 1.5 million stock units.

It revealed today that operating profit in the year to June 30 dropped 36 per cent to $27m as revenue fell 4 per cent to $210.5m.

Dividends paid to the New Zealand government have been cut by more than a quarter to $20m.

In a statement the company said the fall in profits was caused mainly by falling prices for milk and logs.

Revenue dropped despite volume growth in all of Landcorp's land-based production, including record milk solid production of 13,400 tonnes, an increase of 900 tonnes on the prior year.

Landcorp also warned that it expected product prices in the year to June 30, 2013 to be ''more volatile and generally lower'' than the previous year.

''This will reflect the continued negative impact of the global financial crisis on demand in European, North American and Asia economies, and particular supply and demand factors in markets for wholesale milk products. New Zealand exchange rates will continue having a major impact on income and exporting.''

It is forecasting net operating profits will fall to $13m in the year to June 30, 2013, based on current product prices.

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