LIC profit falls as bull value gains slow

One of the breeding bulls at Livestock Improvement in Hamilton. Photo / Greg Bowker

Livestock Improvement Corporation, a farmer cooperative that sells bull semen and provides a dairy genetics database, posted a 3 percent drop in annual profit because its elite breeding bulls didn't increase in value as much as the previous year.

Profit fell to $23.7 million in the year ended May 31, from $24.4 million a year earlier, the Hamilton-based company said in a statement. The value of its 866 elite breeding bulls rose $2.7 million compared with a $9.4 million gain on its 870 bulls the year earlier.

LIC, as the company is known, is farmer owned through cooperative control shares and investment shares that trade on the NZAX market. The company, which excludes changes in elite bull valuations when setting returns to shareholders, will pay a record dividend of 54.91 cents per investment share, and 8.4 cents per cooperative control share.

Shares in LIC gained 0.2 percent to $5.81, taking their gain so far this year to 7.4 percent.

Revenue rose 12 percent to $199 million on increased demand for artificial breeding, parentage testing and animal health testing services, the company said.

Still, a shorter dairy season as a result of the drought led to farmers drying herds off early and reduced demand for the company's herd tests in autumn, chairman Murray King said.

The company's genetics unit, which accounts for 59 percent of earnings, posted a 26 percent rise in pre-tax profit to $48.4 million. Its farm software segment, which makes up 27 percent of earnings, increased pre-tax profit 22 percent to $21 million. Meanwhile pre-tax profit for herd testing dropped 15 percent and earnings for its farm automation unit fell 26 percent.

In New Zealand, which accounts for 94 percent of revenue, sales rose 14 percent to $187.5 million. Revenue fell in all its main overseas markets.