Wednesday 10th February 2016
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Livestock Improvement Corp, the farmer-owned cooperative that focuses on herd genetics, farm software and automation, says profits slumped 46 percent, due to the lower dairy payout and reduced farmer spending.
The NZAX-listed company had already warned about its performance last October and chairman Murray King is now more downbeat about the full-year results, saying he expects them to be closer to a break even position, after signalling in October that it would still exceed last year's figures.
Net profit in the first half was $15.9 million, while revenue fell 9 percent to $145 million.
King said the result was a reflection of this season's lower forecast milk price creating challenging financial situations for many dairy farmers.
"We continue to actively manage and minimise costs, without impacting our service to farmers," King said. "It's times like this when service becomes even more important, so we are hugely focused on that. We have made significant reductions in our operating costs over the last six months and these will be sustained through the rest of the year".
Cash flows from operations were a negative $17 million, reflecting extended terms given to farmers, a turnaround from the $6 million positive cash flow in the same period a year earlier.
LIC dates back to 1909 and employs more than 800 people, with offices worldwide. All profits are reinvested in research and development or paid out to farmers/shareholders in dividends. Shares are currently priced at $3.80 and have fallen by a third when compared to a year ago.
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