$3-5m loss forecasted for NZ farming company

NZX-listed New Zealand Farming Systems Uruguay says it is heading for a loss of US$3 million to US$5 million in its financial year to June 30 if milk production does not pick up.

New Zealand Farming Systems Uruguay (NZS), which was formed in 2006 for the purpose of applying New Zealand dairy farming technology to extensive land areas in Uruguay, said its farm development programme has continued to progress. Eight new dairies farms opened in May and more are expected to be opened over the next month, it said.

"Milk production continues to increase significantly year-on-year, although the very dry summer and autumn weather in Uruguay along with the later than expected completion of the new dairies, has resulted in milk production to date being below forecast," NZS said.

The company said it would not achieve a break-even position at the earnings before interest and tax (EBIT) level - before any livestock "fair value" adjustment - for the year, as it had said in its half year report.

"On the assumption that current conditions do not change markedly prior to year end, NZS will finish the year with a loss of between US$3m and US$5m at the EBIT level before livestock fair value adjustment," it said.

However, the company said it would be in a break-even position if the fair value adjustment was included.

Singapore-based food company Olam International started building a stake in the NZS in 2009 and now owns 85.9 per cent of the stock.

NZS shares last traded at 54c, down from 70c this time last year.