State-owned farmer Landcorp has doubled its net profit to $30 million for the year ended June 30, 2014, up $13m from the previous year.
Total revenue from operating activities increased 37 per cent to $241.7m.
New Zealand's biggest farmer, with 137 properties on its books, paid $7m to the Government as a dividend, up from $5m the year before.
Revenue was boosted by better production following improved weather and recovery from the effects of the 2012-13 drought. Record dairy milk prices and the company's dairy expansion also lifted profits.
Landcorp chief executive Steven Carden said that despite the prospect of lower prices, he was confident about the coming year.
"We have strengthened our productive capacity and secured economies of scale through new partnerships with landowners like the Hauraki Collective, introducing a state-of-the-art Farm Management software system, and a company-wide initiative to reduce costs and streamline decision-making at the farm level," Carden said.
"We've also made solid gains in feed production per hectare and have achieved a 10 per cent lift in dairy production."
Landcorp's total shareholder return was $115.9m compared with a $1.5m loss the previous year. The increase was mainly due to a $36.7m unrealised gain in the market value of livestock and a $67.6m revaluation gain on land and improvements.
High dairy prices and success with partnerships for expanded production increased milk revenue by 70 per cent to $129m.
Expenses lifted 15 per cent to $207m due to the start of a sharemilking arrangement with the Shanghai Pengxin Group and expansion of the Wairakei Pastoral Dairy conversion programme.
Landcorp also spent more on food to take advantage of high dairy prices and to offset the effect of the dry conditions in the North Island in early autumn.
Following the sale of some North Island farms, debt was reduced by $56m to $172m.
Carden said Landcorp was well placed to continue to record sustainable profit growth over the medium term.
"In addition to our productivity improvements, we have a strategy focused on significantly improving our environmental footprint and driving a big lift in the calibre of our people and their safety on-farm.
"In the medium and long term, we will be taking significant steps to reduce our exposure to commodity price cycles. In part, that means maintaining a diverse portfolio of species farmed – including a renewed emphasis on expanding our red meat production in our lamb, beef and venison categories. This will involve collaborating with other farming groups, such as iwi, interested in joining our contracts or establishing new ones with us.
"We also plan to ensure our products are targeted at niche markets where we can have a direct relationship with the customer," he said.