Allied Farmers shares jumped 23 per cent after the rural services firm raised annual earnings guidance on a much stronger pick-up in livestock sales than expected.
The Hawera-based company said pretax profit in the 12 months ending June 30 will be at least 40 per cent higher than the $1.57million reported last year as dairy herd sales beat expectations. That comes as the recovery in global dairy prices has renewed optimism about the sector, after a period of retrenchment where cash-strapped farmers were forced to cull their herds to cut costs in order to stay on top of debt. The shares climbed 1.6 cents to 8.5 cents, the highest since November 2014, and valuing the company at $13.7m.
"Very buoyant cattle prices, favourable seasonal conditions, firm sheep prices and high dairy livestock sale tallies have driven this performance above expectations," chairman Garry Bluett said in a statement. "Livestock trading has been materially stronger than the prior year and benefited from strong farmer support, the ongoing growth of the livestock team, a solid NZ Farmers Livestock reputation and now established MyLivestock web and app digital tools."
Allied Farmers has been focusing on its livestock division, having largely wound down the residual assets from its acquisition of the Hanover and United Finance loan books in 2009. That unit outperformed expectations last year after a soft 2015 result when the downturn in dairy and uncertain farmgate payout caused farmers to put off buying livestock.
The company will publish the audited 2017 accounts by the end of August.
