Uruguay venture misses targets
New Zealand Farming Systems Uruguay announced yesterday it had missed its full-year earnings guidance and it is considering raising up to US$135 million (NZ$166.6m) in capital.
The listed company develops and runs dairy farms in Uruguay.
As previously signalled, repayment of a US$110m short-term shareholder loan from Olam International is due by December 31. Singaporean-based food company Olam gained an 86 per cent stake in the Uruguay company last year.
However, it failed to get the 90 per cent that would have allowed it to take 100 per cent ownership of the company. There was strong opposition from a group of minority shareholders to Olam's offer of 70 cents per share.
New Zealand investors hold about 14 per cent.
Farming Systems chief executive David Beca said funding was also required for the capital works programme and to meet operating cash requirements.
The shares last traded at 57c. Farming Systems said it made a loss of US$7.6m for the year ended June 30, compared with the US$8.7m loss in the June 2011 year. This year's result included an increase in the value of livestock of US$10.1m. This compared with a 2011 US$7.5m increase in the value of livestock and a US$8.1m herd improvement.
Excluding the fair value adjustment of livestock values, the result for the year is a loss of US$17.7m. That is less than the 2011 loss of US$24.2m excluding that year's increase in the value of livestock and herd improvement.
Earnings before interest and tax, before the fair value adjustment and herd improvement for the year, was a loss of US$5.9m compared with a loss of US$19.3m for the 2011 financial year.
This result fell short of the break-even position indicated in the half-year report to shareholders and is outside the range of a US$3m to $5m loss as indicated in June.
This was due to lower milk revenue and higher foreign exchange losses. The late completion of eight dairies also held back total milk production.
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