Livestock Improvement posts record profit

Wednesday 22nd July 2009

Livestock Improvement, the dairy herd breeding cooperative owned by farmers, posted a record annual profit, reflecting the peak of the dairy season in spring 2008.

It plans to cut costs and has frozen salaries in preparation for leaner times ahead. Net profit rose to $24.7 million in the 12 months through May, from $15.6 million a year earlier. The jump in profit allowed LIC to declare a record dividend payout amounting to $12.8 million, amounting to 8.65 cents per cooperative share and 41.9 cents per investment share.

“The bulk of LIC’s income is derived during the peak of the dairy season - spring 2008 – which was a boom time for the industry with prospects for payout approaching $7” per kilogram,” the cooperative said. “The resulting buoyancy and farmer confidence was reflected in record sales volumes and revenue,” which rose about 14% to $150.3 million.

Chairman Stuart Bay said the record annual profit ensures LIC is well-positioned as the dairy industry “progresses through the current downturn and moves into a recovery phase.

“In line with financial pressures on farm, the company has initiated an extensive cost containment programme across the business including a salary freeze, review and reduction of its capital expenditure programme and operating costs,” he said.

LIC’s investment shares rose 10% to $1.76 on the NZAX market today. They have declined 16% in the past three months.

According to LIC’s website, the heart of its business is its database of dairy genetics, which contains “a wealth of animal information provided over many years from its own commercial activities” as well as data accumulated under herd testing regulations.

Businesswire.co.nz

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