LIC Reports Lower Profit Amid Tough Conditions

Highlights:

• Revenue and Profit Decline: Total revenue dropped by 3.3% to NZ$267.3 million, and net profit after tax fell by 71.7% to NZ$7.7 million.
• Strong Research Investment: LIC increased its research and development spending by 14.2%, reaching NZ$21.2 million, with key projects focused on low methane-emitting cows and heat tolerance in dairy cows.
• Dividend Distribution: Despite financial challenges, LIC declared a dividend of NZ$8.3 million, or 5.84 cents per share, in addition to an earlier special dividend of NZ$18.5 million.

Livestock Improvement Corporation (NZX: LIC) has announced its financial results for the 2023/24 financial year, reporting no debt but a modest profit and dividend for its farmer shareholders.

Financial Overview

The cooperative's total revenue was $267.3 million, a 3.3% decrease from NZ$276.5 million the previous year. Net profit after tax (NPAT) plummeted by 71.7%, falling from NZ$27.4 million to NZ$7.7 million. Underlying earnings also saw a significant drop of 41.6%, from NZ$23.7 million to NZ$13.9 million. Despite these challenges, LIC declared a dividend of NZ$8.3 million, equating to 5.84 cents per share, in addition to an earlier special dividend of NZ$18.5 million.

Challenges and Innovations

Board Chairman Corrigan Sowman highlighted several challenges faced during the year, including a lower milk price environment, reduced activity, cost inflation, tax changes, and a semen quality issue that led to over NZ$2 million in credits paid to farmers. Despite these difficulties, the cooperative managed to deliver a positive outcome for its farmer shareholders for the seventh consecutive year.

“Our farmer shareholders are the heart of our co-operative,” Sowman stated, emphasizing the tough year marked by lower milk prices and high input and debt servicing costs. He assured that LIC remains committed to its shareholders by continuing to invest in research, development, and technological innovations.

Investment in Research

LIC's research and development investment increased by 14.2%, totaling NZ$21.2 million, representing 7.9% of revenue. Notable projects included a methane research trial to breed low methane-emitting cows and a heat tolerance program to develop high genetic merit dairy cows with improved heat resilience.

Future Outlook

Looking ahead, Sowman acknowledged the ongoing economic challenges but remained optimistic. LIC expects underlying earnings for 2024/25 to range between NZ$16-22 million, assuming no significant events occur. The cooperative will continue to focus on operational excellence, faster genetic improvement, and software reliability to support its farmer shareholders.

LIC's commitment to innovation and sustainability aims to bolster the agricultural sector and ensure the cooperative's long-term success despite current financial setbacks.

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