Genetics firm's profit up

LIC expects the reduced dairy payout to affect its profit over the full year.

Livestock Improvement Corp, a farmer co-operative that sells bull semen and provides a dairy genetics database, posted a 10 per cent gain in first-half profit on increased demand for its products and services.

Profit rose to $29.7 million in the six months ended November 30, from $26.9 million a year earlier, the Hamilton-based company said. Sales climbed 18 per cent to $159 million.

A record payout to farmers in the 2013/14 season prompted farmers to invest more in their herds as well as paying down debt.

That helped to drive demand for LIC's gestation genetics, DNA parentage testing and information and automation technology systems.

LIC said higher spending, mixed with this season's much reduced milk payout and the seasonal nature of its artificial breeding programme, meant profit would decline in the full year.

"A lower year-on-year net profit after tax result is forecast, as part of the expected impact of milk payout and the co-op's ongoing investment into technology and infrastructure worth more than $20 million," said chairman Murray King.

LIC "has reviewed where it can reduce discretionary costs without impacting service to farmers".

LIC's results are typically skewed to its first half, when there's more demand for its breeding services, and revenue is stronger, while costs are spread over the full year. LIC doesn't declare a first-half dividend.

Cash flows from operations were $6.6 million in the first half, up from $1.2 million a year earlier.

Full-year profit fell 3 per cent to $23.7 million in 2014. In December, LIC acquired a majority stake in its Brazilian genetics distributor with an eye to Brazil's expanding dairy sector.

Shares of LIC were last quoted on the NZX at $6.10 and have declined 19 per cent in the past 12 months.