NZ Farming Systems posts loss on fees

Thursday 14th August 2008

New Zealand Farming Systems Uruguay, the company set up by PGG Wrightson to manage dairy farms in South America, posted a full-year loss after paying a performance fee.

The loss widened to US$7.96 million in the six months ended June 30, from a loss of US$289,000 a year earlier, the company said in a statement. The company paid PGG Wrightson Funds Management an initial performance of US$13.6 million.

Farming Systems spent US$84 million last year buying farmland, taking its total holdings to 36,300 hectares in Uruguay, where the company is importing intensive farming techniques used on New Zealand dairy farms. Helping stoke sentiment, world dairy prices have gained to record levels the past 12 months.

The company said it expects dairy prices will ease from current levels though the medium to long-term outlook is still buoyant. The company plans to raise more capital in the next few months to fund more land purchases, it said.

Shares of the agricultural developer last traded unchanged at NZ$1.80 and have climbed from their IPO price of NZ$1. The shares have outperformed the NZX 50 Index this year, gaining 10% while the index fell 16%.

Wrightson rose 0.7% to NZ$2.75 and have advanced about 50% in the past year.

Some 22,000 hectares were re-grassed and redeveloped, 11 milking sheds started up and the number of livestock doubled to 50,000, the company said. Livestock revaluations were US$17.9 million.

By Jonathan Underhill

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