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 pre
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.
NZFSU expects to reach 100 million litres of milk production in the current season.
The revenue boost was a reflection of net milk sales of $US18.8 million during the year compared with $US10 million during 2008/09. The company received an average price of US26 cents a litre of milk compared with 23.7USc the previous year.
The average milk price rose throughout the season from 20USc in July, 2009, to 35USc in March to May, 2010, before easing to 30 USc in June.
In New Zealand terms, the average milk price roughly equates to $NZ5.70 a kilogram of milksolids, on a 70c NZ/US dollar exchange rate.
The dairy farm development company, which is centred on operations in Uruguay, is also the subject of two takeover bids – one from cornerstone shareholder Olam International, which has an agreement to buy PGG Wrightson’s nearly 12% stake and the other from Uruguay-based Union Agriculture Group (UAG).
Singapore-based Olam’s initial 55c a share bid was trumped by UAG’s subsequent 60c offer.
NZFSU’s board has maintained its advice to not sell to Olam in a target company statement released alongside its annual results this afternoon.
The board’s reasons include that the Olam price is too low, based on the UAG offer.
In addition, the board said Olam’s implied plans to change the business model of the company are based on what it considered incorrect assumptions.
“A change in strategy now would reduce the company’s ability to capitalise on the positive outlook.
“The offer provides insufficient detail on development funding plans,” the company said in its results.
The board signaled there was a prospect that it could raise new equity from a potential investor on terms that are favourable to all shareholders.
