RESEND: LIC lifts first-half profit 10% on demand for dairy breeding technology
Livestock Improvement Corp, a farmer cooperative that sells bull semen and provides a dairy genetics database, posted a 10 percent gain in first-half profit on increased demand for its products and services.
Profit rose to $29.7 million in the six months ended Nov. 30, from $26.9 million a year earlier, the Hamilton-based company said in a statement. Sales climbed 18 percent to $159 million.
A record payout to farmers in the 2013/14 season prompted farmers to invest more in their herds as well as paying down debt. That helped drive demand for LIC's gestation genetics. DNA parentage testing and information and automation technology systems. The company said increased spending, combined with this season's much reduced milk payout and the seasonal nature of its artificial breeding programme means profit will decline in the full year.
"A lower year-on-year net profit after tax result is forecast, as part of the expected impact of milk payout and the co-op's ongoing investment into technology and infrastructure worth more than $20 million," chairman Murray King said. LIC "has reviewed where it can reduce discretionary costs without impacting service to farmers."
LIC's results are typically skewed to its first half, when there's more demand for its breeding services, and revenue is stronger, while costs are spread over the full year. LIC doesn't declare a first-half dividend. Full-year profit fell 3 percent to $23.7 million in 2014, down from the first-half result and implying a second-half loss.
Cash flows from operations were $6.6 million in the first half, up from $1.2 million a year earlier.
In December, LIC acquired a majority stake in its Brazilian genetics distributor in a deal aimed at benefitting from growing demand for artificial insemination in Brazil's expanding dairy sector.
Shares of LIC, which are only available for trading by its farmer shareholders, were last quoted on the NZX at $6.10 and have declined 19 percent in the past 12 months, whilke the benchmark NZX 50 Index has gained about 19 percent.