Government nets $5m after Westland Milk sale

The Government is to receive a one-off financial payment from the sale of Westland Milk in July.

The sale of the co-op to Chinese dairy giant Yili was confirmed last month, with 93 percent of farmer shareholders voting in favour of the $588 million sale.

One of Westland Milk's large shareholders was crown-owned Pāmu (formerly Landcorp) which announced a one-off payment to its owner, in a financial statement update.

"The company has declared a special dividend of $5 million, supported by the one-off gain made on the sale of the company's shares in Westland Dairy Cooperative," it said.

Pāmu, which owns farms across the country, reported earnings before interest, tax, depreciation, amortisation and revaluations of $34 million in the 12 months ended June 30, down from $48 million a year earlier.

It followed a marked slowdown in milk production due to dry weather during late summer and autumn.

The company produced a net loss after tax of $11 million, due largely to a $22 million fair value loss on the valuation of livestock and forestry assets at 30 June 2019. 

Chairman Warren Parker and Chief Executive Steven Carden said that while the company's performance generally reflected external factors that made it another challenging year for agriculture in New Zealand, the company was determined to improve on the result in the current year.

"While our net profit suffered from the impact of the valuation write-downs, and our revenue was impacted by lower milk production due to drought, the continued focus on reducing costs, and generating acceptable returns will be a key focus in the current year," they said.

"Milk is an important source of revenue for us and we continued to focus on A2 and organic milk production, which receives good premiums. New Zealand-wide farm gate milk prices dipped in 2018/19 which flowed on to a drop in milk-related revenue for the company."

Pāmu's total revenue was down 2.4 percent to $241 million (2017/18: $247 million) because of lower milk, livestock and carbon credit revenues. 

"Like other New Zealand farmers, Pāmu saw relatively high dairy and red meat prices through 2018/19 which were offset by weather extremes lowering production volumes. Most notably, summer and autumn rainfall was significantly below average across the North Island and parts of the South Island."