Landcorp's result affected by dairy payout

NZ's biggest farmer, state-owned Landcorp will return just $10 million to government coffers. However, the company managed to claw its way back from dismal half-year results showing a $3.1 million operating loss to produce a $7 million net operating profit for the 2008/09 financial year reports The National Business Review. This was down $4 million on last year. Plummeting land values has led to an overall loss to shareholder return of $76 million "“ a massive $351.5 million down on last year's overall $275.5 million return. During the 2008/09 year, land values declined 8% against a massive 21% increase the previous year. Result were impacted by the sharp fall in annual payout for dairy producers, rocketing farm input costs and production inputs. There was also continuing severe drought impact in the previous year and a slowdown in the section sales of property development subsidiary Landcorp Estates. CE Chris Kelly said dairy revenues took a 24% hit during the year, shaving about $20 million of Landcorp's bottom line. He said if dairy returns had been as strong as predicted early in the season at around $7 per kilogram of milksolids (kgMS), Landcorp would have had a record year. "When the payout dropped (to $5.20kgMS) we regigged all our cost structures to cope," Mr Kelly said. Total revenues for the year increased 6% to $174.1 million with good gains in sheepmeat and deer offsetting the declines in dairy and beef. Kelly warned that lamb prices could soon tumble to about $60 again. In dairy, Mr Kelly said Landcorp was continuing to review its cost structure and said he was hoping to be in a much better positions this time next year. "The dollar is start to hurt as every cent the NZ dollar increases against the US, shaves about 10c kgMS off the dairy payout. Landcorp runs 1.6 million head of stock across its dairy, beef, sheep and deer farms.