Allied Farmers expects a recovery in dairy herd sales will bolster the rural services firm's annual earnings while announcing a smaller decline in first-half profit than flagged earlier this month.

The Hawera-based company said net profit fell to $476,000 in the six months ended December 31 from $615,000 a year earlier, slightly ahead of the $420,000 forecast it provided on February 9. Profit attributable to shareholders rose to $281,000, or 0.17 cents per share, from $240,000, or 0.17 cents, a year earlier.

Pre-tax earnings from the rural services divisions almost halved to $657,000 on a 1 per cent dip in revenue to $10 million, which the company said was due to a 15 per cent fall in calf processing export sales on a smaller margin.

Allied Farmers has been refocusing its business on livestock after avoiding liquidation in 2013 over outstanding debts related to its failed finance business, Allied Nationwide Finance. The company had tried to reinvent itself as a major lender in a debt-for-equity swap with the Hanover Finance group, although it struggled to integrate the larger loan books which held less value than it thought.

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Chairman Garry Bluett said Allied Farmers has contracted several new agents and is in talks with more in an effort to build out the livestock business.

Dairy herd sales typically make a significant contribution to profit, and "forward sales herd contracts due for settlement predominantly in May are significantly ahead of the same time last year," he said. "Other livestock tallies and values are tracking well and the directors expect that the first-half impact will be recovered in the second half."

Farmers culled their dairy herds last year as they grappled with a slump in global prices and a forecast farmgate milk price at a level where many struggled to break even. Since then, prices have recovered and confidence has improved, and Heartland Bank last week said there were anecdotal signs some farmers were looking to finance livestock purchases after last year's cull.

Profit attributable to the company's minority interests fell to $195,000 in the half from $375,000 a year earlier. They were paid dividends totalling $146,000 compared to $112,000.

Allied Farmers' asset management unit, which houses the former Hanover assets, posted earnings of $31,000 in the half, down from $120,000 a year earlier, and had $33,000 of assets at the December 31 balance date.

The company's cash outflow was $2.9m in the half, compared to $910,000 a year earlier, including a $1.9m outflow in operational cashflow. That left it $453,000 in overdraft at the balance date.

Allied Farmers owed ANZ Bank New Zealand $2.9m as at December 31, down from $3.2m a year earlier, and was within its financial covenants in the period.

The shares last traded at 6.9 cents, and have gained 38 per cent over the past 12 months.