NZFarming Systems predicts wider losses

PGG Wrightson would not wanted to hear this news just after increasing its debt with the SFF settlement. Offshoot NZ Farming Systems Uruguay says its operating losses in the current year are now likely to be nearly double its earlier forecast reports Business Day. The company put out a profit warning toward the end of 2008, in which it said it expected an earnings before interest and tax (ebit) loss of US$11 million for the year to June. But today, chairman Keith Smith warned that the loss was more likely to be about US$20 million ($36 million).  "The recent Uruguayan drought has had significant short term impacts on the company's performance, which caused lower than expected milk production and lower prices of cattle and higher percentage of re-grassing," he said. Although drought-breaking rains in February provided much-needed relief, recent pasture production had slowed due to the onset of further dry weather, reducing milk production. "Whilst there has been no necessity to sell capital stock, some livestock was sold due to the drought conditions to prioritise available feed for the milking herd. However, the return on the livestock sold was lower than previously forecast given the impact of the drought on stock prices in Uruguay," Smith said. International dairy prices appeared to have bottomed, with the price received by the company for its milk production lifting slightly to US20c per litre in March. "Nothing in the update alters the future positive prospects for the business," Smith said.