A falling milk price and challenging economic conditions have seen LIC’s revenue fall 3% to $171.9 million and profit drop 13% to $29m in the dairy improvement co-operative’s half-year result.
LIC chair Corrigan Sowman said the co-operative’s strong cash position provided a degree of resilience and that, relative to the current economic conditions, he is pleased with the result.
The decreased revenue was driven by the lower milk price environment, as well as credits provided to farmers as a result of a recent semen quality issue.
“Farmers have had a challenging year as they’ve had to tighten their belts in response to a lower milk price payout. The stakes are high, but they continue to show resilience.
“As a co-op, it’s our job to support farmers to navigate these challenges, in particular, providing them with the right tools to breed the most sustainable and profitable herds, now and into the future.”
He said this year had highlighted the importance of cow efficiency and ensuring that the national dairy herd is made up of high-producing, efficient cows.
“Recently, Fonterra announced it is targeting a 30% intensity reduction in on-farm emissions by 2030. We have an important role to play in supporting farmers to meet these targets and we are proud to be part of the solution. Targeting a reduction in emissions intensity cements our ongoing focus on cow efficiency – we don’t need more cows, we need better cows.”
LIC’s underlying earnings forecast range at year end is unchanged from the market update in August 2023 at $17-22m.
LIC also declared a 13 cent per share special dividend from the proceeds of the sale of shares in United Kingdom company National Milk Records completed in late 2023.
Within the reporting period, demand remained steady for LIC’s animal health products, to keep cows healthy, productive and protected.
Other half-year highlights include the advancement of LIC’s heat tolerance programme, which aims to provide farmers with the ability to have high genetic merit dairy cows with improved heat tolerance.
The programme is currently in its next stage – investigating how slick-coated animals fare in winter. The research will be critical to ensure that the co-op can provide farmers with a solution that equips cows for the challenges of a changing climate.
LIC’s methane research programme is also progressing well, it said, and the co-op hopes to produce a methane breeding value and give dairy farmers the opportunity to access low methane elite genetics by 2026.
The co-operative said it is on track to deliver a year-end result in line with expectations and guidance previously provided to the market.
