Landcorp Farming, New Zealand's largest corporate farmer, cut its forecast for 2015 earnings for a second time, citing weaker milk prices.
The state-owned farmer said it expects net operating profit of $1 million to $6 million in the year ending June 30, 2015, down from a previous forecast of $8 million to $12 million, and an earlier estimate of $20.5 million in its statement of corporate intent. The Wellington-based company had net operating profit of $30 million in its 2014 financial year.
Landcorp pulled back its profit expectation, reflecting the slide in global dairy prices this year from their February peak, which has prompted Fonterra Cooperative Group to slash its forecast farmgate milk price to $5.30 per kilogram of milk solids, down from a previous estimate of $6/kgMS, and from $8.40/kgMS in 2014. Dairy product prices fell to the lowest level in more than five years in Fonterra's fortnightly GlobalDairyTrade auction last week.
The downgrade "reflects the recent downward revision in Fonterra's forecast milk payment to $5.30 per kg of milk solids and the potential for further softening in milk payouts," Landcorp said in a statement.
The forecast is early in the season and assumes no adverse weather conditions, deterioration in foreign currency or current market prices, the company said.
(BusinessDesk)
Tina Morrison
Sat, 11 Oct 2014
Sat, 11 Oct 2014
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Landcorp cuts 2015 earnings forecast on lower dairy prices
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