A boost in milk production and a tight rein on expenses ensured costs grew more slowly than revenue, helping New Zealand Farming Systems Uruguay (NZFSU) to an improved end-of-year financial result.
The company reported a $NZ14.8 million operating loss from its Uruguayan dairy farming activities in the year to June 30, well down on the $23 million a year earlier, largely attributed to a 42% growth in revenue from $22.5 million to $32 million.
Chairman John Parker said NZFSU was back on track, helped by a year without climatic extremes, and he expected a further improvement in the company's finances with profitability in the 2011-12 year.
Farm working expenses grew 12% in the year under review, despite a 52% growth in milk production which reached 68 million litres, he said.
It received an average price of 40c a litre compared with 34c a year earlier.
Farm valuations were steady while livestock valuations grew 22%.
Net milk sales for the year under review were $27 million, nearly double the $14 million recorded the previous year, while cattle sales contributed $3.4 million compared with $6.1 million for the previous corresponding period (pcp) due to the sale of beef cattle, while other sources of income were steady at $2 million.
Mr Parker said the area of land being farmed increased from 10,500ha to 12,500ha and the number of cows in milk from 11,300 to 14,000, but farm working expenses only rose from $32 million to $36 million.
After allowing for land and livestock valuations, the total loss for the period was $11.2 million compared with $65 million pcp.
The $43 million raised from a bond issue allowed NZFSU to invest in four new dairy sheds with a fifth close to completion, and more than 1200ha of new irrigation.
During the year, NZFSU sold land worth $22 million and has conditional agreement to sell land worth a further $10 million which together would represent a gain of $420,000.
PGG Wrightson received a management fee of $3.1 million for the year, but no fee was payable in the coming year with the contract ending on July 19.
The company has 31 dairy units across its 16 farms but plans to increase that to 49 units when development is completed.
It was targeting production in the coming year of 100 million litres.
