Dairy boom boosts Landcorp's profit

The dairy boom is lifting the fortunes of the Government's farming company, Landcorp, owner of 108 farms throughout New Zealand.

Income from milk jumped to $39.5 million in the six months to December 31, up from $21.5 million a year earlier, the company reported yesterday.

This outweighed depressed returns for lamb and resulted in a pre-tax operating profit of $9million, compared with a loss of $4.9 million previously.

Directors say that pre-tax operating profit is now the most meaningful way of stating earnings, as the bottom-line figure is distorted by the requirement under new international accounting rules to allow for changes in livestock values.

This will lead to greater volatility in reported earnings without giving a true picture of the operational business or total shareholder returns, they say.

In the latest half-year, livestock values jumped $34 million to $222 million, with almost the entire increase due to dairy herds.

Chairman Jim Sutton and chief executive Chris Kelly said the cows would be kept for milk production and breeding so the valuation gains would remain unrealised.