NZ Farming Systems sees return to profit as milk prices soar

NZ Farming Systems flags return to profit on surging milk prices

June 28 (BusinessDesk) – NZ Farming Systems Uruguay Ltd., the South American dairy farm manager, may return to profit earlier than forecast on higher-than-expected milk prices.

The company, which is facing a full takeover bid from majority owner Olam International Ltd., expects to post a net profit of US$2.9 million in the 2012 financial year, it said in a statement. Farming Systems previously flagged a loss of US$1.9 million. Earnings before interest tax are forecast at US$8.9 million, up from US$3.3 million.

Farming Systems’ draft forecasts have improved earnings “primary as a result of a higher than assumed average milk price of US 37 cents per litre,” the company said in a statement.

The budget, which has yet to be formally approved, will be considered at a board meeting tomorrow, the company said.

Earlier this week, parent Olam said it won’t lift its 70 cents a share bid to minority shareholders to take full control of the company, though the higher than expected milk prices mean its offer might not be as compelling.

In May, Grant Samuel’s independent report said the bid had merit, but was reliant on Olam’s forecast.

Earlier this month, a group of minority shareholders said the offer was too low, and claimed it had enough support to block compulsory acquisition, which kicks in if Olam gets to 90%.

The shares fell 2.8% to 70 cents in trading today, and have climbed 13% this year.

(BusinessDesk)

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