3 Nov 2010

NZFSU issues profit warning

10:31 am on 3 November 2010

New Zealand Farming Systems Uruguay has issued a profit warning. It's now forecasting a loss of $US16 million, compared to an earlier estimate of $10 million.

Farming Systems, which is now 78% owned by Singapore-based Olam International, says milk volumes fell 10& below budgeted levels in the first quarter, and that's likely to continue.

The dairy company says difficult winter conditions, and cashflow problems, prevented fertiliser from being spread on time, and extra feed had be brought in.

This has meant higher feed costs to the company, and if current dry weather continue, the company says, costs could increase further.

At its annual meeting last month, Farming Systems Uruguay said it wouldn't become profitable until 2015, three years later than planned, and it won't be paying a dividend until at least then.