Pāmu Reports $20 Million Net Operating Profit Amid Challenging Year
Source: DairyNews.today
State-owned farmer Pāmu has reported a net operating profit of $20 million for the financial year ending June 30, 2024, despite facing significant challenges, including a revaluation of its property and livestock assets. This result marks a decrease from the previous year's $33 million net operating profit, reflecting a tough operating environment.
Chief Executive Mark Leslie emphasized that the net operating profit is the company’s primary performance metric, though it ultimately translated into a net loss after tax of $26 million for the 2024 financial year. This compares to a net loss of $9 million in 2023. Leslie noted that the 2023 financial results had been bolstered by a $20 million gain on milk futures, whereas the 2024 results included a $1 million loss in this area.
One of the major factors affecting the company’s financial performance was the revaluation of its farm portfolio, which led to a $141 million reduction in property values. Of this, $4 million was included in the 2024 net loss after tax. Additionally, Pāmu recorded a fair value loss of $9 million on livestock, an improvement from the $22 million loss reported in 2023, largely due to declining sheep values and a $6 million decrease in the fair value of forestry assets.
Net finance expenses also rose to $26 million, $3 million higher than the previous year, primarily due to increased interest costs. Despite these financial pressures, Pāmu demonstrated strong operational productivity. The dairy cow in-calf rate increased by 3% to 68%, milk production rose by 3.6% to 14.2 million kg/MS, lambing percentages improved by 1.5% to 132.4%, and total red meat production was up by 4% to 17.9 million kg.
In terms of costs, operating expenses were reduced by 2% to $227 million, down from $232 million in 2023. Leslie highlighted the company's strategic investment in FarmIQ Ltd, increasing its equity ownership from 56% to 69%, with FarmIQ’s results now fully consolidated into Pāmu’s financials. This investment is part of Pāmu’s broader strategy to leverage digital technologies and data to enhance decision-making on farms, improve regulatory compliance, and meet consumer demand for transparency in food production.
Leslie also noted that Pāmu has made progress on several strategic initiatives, including placing 10,000 hectares under QEII covenants, eliminating quad bikes from its farms, introducing a new apprenticeship scheme, and launching a methane reduction genetics program.
Looking ahead, Leslie acknowledged that the company’s net operating profit for 2025 is forecasted to decline by $12 million to $8 million. However, he remains optimistic, pointing out that over the full 2023-2026 period, Pāmu is expected to deliver a cumulative net operating profit of $106 million, exceeding its business plan target of $100 million.
One of the major factors affecting the company’s financial performance was the revaluation of its farm portfolio, which led to a $141 million reduction in property values. Of this, $4 million was included in the 2024 net loss after tax. Additionally, Pāmu recorded a fair value loss of $9 million on livestock, an improvement from the $22 million loss reported in 2023, largely due to declining sheep values and a $6 million decrease in the fair value of forestry assets.
Net finance expenses also rose to $26 million, $3 million higher than the previous year, primarily due to increased interest costs. Despite these financial pressures, Pāmu demonstrated strong operational productivity. The dairy cow in-calf rate increased by 3% to 68%, milk production rose by 3.6% to 14.2 million kg/MS, lambing percentages improved by 1.5% to 132.4%, and total red meat production was up by 4% to 17.9 million kg.
In terms of costs, operating expenses were reduced by 2% to $227 million, down from $232 million in 2023. Leslie highlighted the company's strategic investment in FarmIQ Ltd, increasing its equity ownership from 56% to 69%, with FarmIQ’s results now fully consolidated into Pāmu’s financials. This investment is part of Pāmu’s broader strategy to leverage digital technologies and data to enhance decision-making on farms, improve regulatory compliance, and meet consumer demand for transparency in food production.
Leslie also noted that Pāmu has made progress on several strategic initiatives, including placing 10,000 hectares under QEII covenants, eliminating quad bikes from its farms, introducing a new apprenticeship scheme, and launching a methane reduction genetics program.
Looking ahead, Leslie acknowledged that the company’s net operating profit for 2025 is forecasted to decline by $12 million to $8 million. However, he remains optimistic, pointing out that over the full 2023-2026 period, Pāmu is expected to deliver a cumulative net operating profit of $106 million, exceeding its business plan target of $100 million.
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