Landcorp Farming, the state-owned farmer, posted an operating loss in the first half of its financial year but said higher milk prices mean it expects to be back in the black for the full year.

The Wellington-based state-owned enterprise posted an operating loss of $8.9 million in the six months ended December 31, unchanged from the year earlier period, it said in a statement. Revenue was also little changed at $109.3m from $108.8m, it said. It won't pay an interim dividend to the Crown.

Landcorp was created out of the Department of Lands and Survey in 1987 and farms 144 properties, predominantly producing sheep, beef, venison, milk, deer velvet, and wool. An increase in milk prices has lifted the income Landcorp gets from its dairy farms although the livestock unit weighed on the latest result, the company said.

Despite a 30 per cent increase in the milk price, Landcorp said its income was hurt by a 21 per cent drop in livestock revenue "due to fewer animals sold and higher costs to purchase livestock".

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Landcorp reiterated its December forecast for a full-year operating profit of between $2m and $7m, ahead of its original forecast for a loss of $13.1m. It posted an operating loss of $9.4m last year.

For the first half, net profit after tax fell 12 per cent to $41m. The profit measure includes significant revaluation gains and losses from the value change in livestock and financial instruments, it said.