Bigger dividend still poor return on capital

Record milk production will enable Landcorp to boost its dividend to the government:

 

Landcorp will increase the full-year dividend to $20 million from the $15 million payment budgeted for, after “strong production and livestock product prices” boosted operating earnings, the company said in a statement yesterday. The improvement included record milk production of 13.3 million kilograms of milk solids.

The state-owned enterprise’s operating earnings were about $27 million in the year ended June 30, “greatly improved” from the $16.3 million forecast, but down from $42.2 million a year earlier.

The dividend will be higher but income, while higher than expected, is lower than last year and shareholder return is dismal.

The state-owned enterprise’s operating earnings were about $27 million in the year ended June 30, “greatly improved” from the $16.3 million forecast, but down from $42.2 million a year earlier.

Landcorp will deliver total shareholder return of about $8.1 million, some $85.3 million below budget.

“This largely reflects static farmland values over the year and a decline in livestock values,” it said.

The half-year report to December 2011  shows the company has about 90% equity which is a permission most other farmers would envy.

But it still makes a very poor return on capital.

That once more raises the question: why is far state in farming when there are so many areas where the money would be better invested?

2 Responses to Bigger dividend still poor return on capital

  1. ianhandcock says:

    That very reason is why I do not support Landcorp having any thing to do with the Crafar farm deal. I have seen the waste of money on other dairy farms on flat land so can only imagine what disasters are ahead ‘sharefarming’ marginal dairy land.

  2. JC says:

    Ian,

    If the Chinese wanted a commercial operation they’d have done a deal with someone like Armer. Instead they have taken a strategic stake in NZ dairy with the most PC manager imaginable.

    Indeed, at least half the rage coming from the left side of the fence is that a *government* owned company is the manager and lending credibility to foreign ownership.

    From memory there are only five countries in the world with more strict rules on foreign direct investment than NZ.. North Korea, China, Japan and a couple of Arab countries; no wonder the Crafer deal is opposed because it strikes directly at our xenophobia, brownmail and greenmail!

    JC

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