New Zealand Farming Systems Uruguay’s fortunes have improved, with a reduced loss reported for the 12 months to June and a signal that production will increase more than 30% during the current season.

Its operating loss from farming activities over the previous 12 months is down to $US10.4 million, an improvement on the $US15.6 million loss experienced last year.

This is on the back of revenue hitting $US22.5 million, a 42% improvement on last year, based on production increases of 52% to 68 million litres of milk.

NZ Farming Systems Uruguay will miss a deadline to pay an $18 million performance fee to PGG Wrightson – but it will pay some.

The company was due to pay a performance fee due to cornerstone shareholder PGG Wrightson of nearly $18 million by the end of this month

When the company released its interim results in February, chairman John Parker said he was confident it would be paid on time, but stopped short of guaranteeing it.

“We owe it, it will be paid,” he said then.

NZ Farming Systems Uruguay is clawing back from its massive $US46 million loss last year, with improvements both to revenue and costs revealed in its interim results today.

The company, part owned by PGG Wrightson, has posted a net $US6.9 million interim loss for the six months to December today compared to a loss of $US8.9 million for the same period last year.

Revenue increased to $US10.9 million from $US7.7 million for the same period the previous year while the operating loss due to farming activites nearly halved to $US2.5 million from $US5.1 million.

Improving dairy prices will reduce the loss made by New Zealand Farming Systems Uruguay (NZFSU) this year.

NZFSU, a sister company to PGG Wrightson, advised today an increase in milk price received in November was 27c per litre, up 3c on October.

As a result the company expects its ebit loss to be no more than $US10 million.

Analyst consensus for the 2009/10 financial year estimated a loss of $US10-$15 million .

New Zealand Farming Systems Uruguay (NZFSU) has signalled a breakeven cash flow in two years after posting a net loss of $US45.9 million today.

By then development expenses, particularly on infrastructure including irrigation and electricity networks, should be in place and on-farm profit based on higher stock levels, increasing milk production and better returns will rise.

The NZX-listed company was founded by PGG Wrightson and former PGG Wrightson chairman Craig Norgate and listed in 2006.