Performance Highlights H1 2019-20:
- $163 million
total revenue, up 1.4% from $161 million in the same period last year.
- $30.3 million
net profit after tax (NPAT), down 7.6% from $32.8 million in the same period
- $58.4 million
earnings before interest, tax, depreciation and amortisation (EBITDA), down
- $43.1 million
earnings before interest and tax (EBIT), down 6.5%.
- Underlying earnings
(NPAT excl bull valuation change)* range remains forecast to be $21-25 million
for year-end, up from $19.5 million in 2018-19.
Total revenue was up on the same period as last year and, while NPAT,
EBIT and EBITDA were down due to timing of expenses incurred within the period,
the co-op’s guidance for underlying earnings* at year-end is still expected to
be above the prior year.
LIC continues to operate a strong balance sheet with total assets
including cash, software, land and buildings and bull teams of $425 million, up
from $409 million on the same period as last year. Cash flows from operations
were $14.4 million, down from $19.4 million for the same period last year.
Half year results incorporate the majority of revenues from the
farmer owned co-operative’s core artificial breeding (AB) and herd testing
services, but not a similar proportion of total costs so are not indicative of
the second half, nor the full year, result. Revenue from international and
technology products is also spread through the year. No dividend is declared at
Board Chair Murray King said the result was in line with market
guidance reported in July and is underpinned by the co-op achieving the
milestones on its strategic roadmap, which have shaped LIC into a modern,
progressive and high performing co-op.
“This is another solid result which builds on all the work we have
done in recent years to transform the business and drive an innovation-led
growth strategy to keep LIC and our farmers leading the global pastoral dairy
“LIC’s strategy is built off a global understanding of the factors
driving change in global dairy markets and here in New Zealand. This is
important at a time when dairy farmers need certainty and trusted partners to
help them navigate the change. It
requires financial strength, high-performance and a clear focus on the innovations
needed on-farm to keep our customers’ farms competitive, profitable,
sustainable and efficient.
“Data is the fuel to drive this strategy forward and we will
continue to drive our access to and use of data. It provides the insights for
LIC’s herd improvement and technology innovations and to enable real-time
decision making on-farm. It also improves our ability to make the right
decisions about where to invest and where to focus our critical R&D spend,”
Precision Farming Solutions
King said the result was driven by a continued shift towards
‘precision farming’ with farmers investing more in genetics and technology
solutions that support them to produce more with less and drive further
improvements in efficiency and sustainability.
Sales in New Zealand during the half-year period reflected
increased demand for LIC’s premium AB products to deliver increased value
on-farm, including genomic bulls, sexed semen, and genetics offerings in A2A2,
short gestation and Wagyu.
for animal health and diagnostics testing also increased, with more farmers
proactively monitoring the health and wellbeing of their herd against diseases
such as BVD and Johne’s, to enable early diagnosis, treatment and to minimise
farmers are also adopting LIC’s technology solutions including satellite
pasture management service SPACE, which continues to grow in popularity, and
more farmers are making the switch to LIC’s web-based MINDA LIVE system and
MINDA app for animal recording and insights.
markets continued to perform strongly, King said, particularly Australia, South
America and South Africa. However, the automation subsidiary business was
challenged by a shortage of capital in the market with revenue down 23% from
the same period as last year.
“New Zealand dairy farmers are becoming
world leaders in precision farming - they are using cost-effective, innovative
solutions to get more value on-farm and ultimately do more with less. This was also evident in the 2018-19 Dairy Statistics with
farmers achieving record milk production while cow numbers continue to decline.
“This is good for our dairy industry’s
profitability, competitiveness and reputation in global markets. It shows our
farmers are evolving with the times, and demonstrating careful stewardship of
their land, their cows and the
resources they need to produce milk.
proud of the role we play to help ensure cows around the country are
year-on-year healthier and more efficient at converting grass into milk, in
turn enabling farmers to reduce their environmental footprint, and we work hard
to develop and deliver solutions that make this easy for them.
“LIC has one of the highest rates of investment in Research and
Development in the primary sector (5.6% of revenue in 2018-19) and our
investment decisions are critical to ensuring New Zealand dairy farmers and our
co-op can continue to lead the global pastoral dairy system into the future.”
Underlying earnings (NPAT excl bull valuation change)* at year-end remains forecast to be in
range of $21-25 million, assuming no significant climate event or milk price
drop takes place between now and then nor any major impacts from M. bovis.
LIC expects underlying earnings* in 2020-21 to be in the range of $21-27 million.