Farmer owned cooperative, Livestock Improvement (LIC) has announced underlying earnings of $19.9 million for the six months to 30 November 2009. This compares to $25.4 million for the same period in 2008/2009.
LIC chairman Stuart Bay said the seasonal nature of the business meant the November results were not indicative of the second half result nor the full year result as they contained the bulk of revenues from artificial breeding, but not a similar proportion of total costs.
Revenue for the six months to November 2009 was $94.7 million, compared to $105.4 million for the same period the previous year.
LIC’s Balance Sheet remains strong with total equity of $186 million compared to $182 million at the same time last year.
Compared to November 2008, the key changes in the balance sheet are :
* Accounts receivable $7.3 million less than 2008 due to reduced sales volume.
* Long term assets higher by $4.3 million than the same time last year due to the revaluation of the bull and stag teams and Tru-Test impairment as at 31 May 2009.
Total operating cash flow for the six months ($6.3) million compared to ($9.1) million the previous year.
Commentary
Stuart Bay said the contrast between the 2008/2009 season, and the start of the 2009/2010 season could not be more stark – the former one of record payout on farm, and prosperity for your cooperative.
“The first six months of the 2009/2010 season was one of the more challenging for dairy farmers, – the normal uncertainties of farming accompanied by one of the worst downturns in recent memory.
“LIC was one of the first agricultural organisations to step forward with a package of support for farmers to help manage cash flow and maintain the quality of herds and the profitability of the farm.
“The package included a 5% increase in the Investamate discount and removal of interest charges on three month deferred payments. Internally, salaries were frozen and the capital expenditure programme and operating costs reviewed and reduced.
“Notwithstanding the farmer package, usage of AB reduced, the impact of which can be seen in revenue for the six months to November 2009 which was $94.7 million, compared to $105.4 million for the same period the previous year.”
Stuart Bay said “while the volatility of dairy payouts will continue, I (like all farmers) am pleased that the equilibrium has been restored to a point where the majority of farmers can maintain and build their businesses, and their profitability.
“LIC addressed this downturn in much the same way as is done on farm – cutting back wherever possible, and concentrating on applying resource and expertise to where it adds most value.”
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