31 Aug 2019

Crown to net $5 million from Westland Milk sale

7:21 pm on 31 August 2019

The profit made by the country's largest farmer from the sale of its shares in Westland Milk Products, will disappear into government coffers via a special dividend.

White and brown cows in a Dairy Cow Farm.

Photo: 123RF

Pāmu, or Landcorp, owns 10 farms supplying to Westland and is its second-largest shareholder.

Earlier this month Westland's 350 farmer shareholders voted overwhelmingly in favour of selling Westland to China's Yili dairy conglomerate at a rate of $3.41 per share.

This will net the Crown $5m from a sale that ministers always strongly opposed.

The payment of the dividend is being made despite the fact that overall, state-owned Pāmu suffered a big loss.

Comment has been sought from the office of the Associate SOE Minister Shane Jones.

"The company has declared a special dividend of $5 million, supported by the one off gain made on the sale of the company's shares in Westland Dairy Cooperative," Pāmu said in a statement.

The special dividend is equivalent to Pāmu's entire dividend last year, when it made a net profit of $34m.

Its after tax loss this year was $11m.

Asked about the special dividend, Pāmu chief executive Steve Carden said allocation of capital was a decision for the company to make, and there was no pressure from government ministers to pay the money.

"That's a decision that the board makes independent of any one else's advice and we are happy to do so."

Pāmu's overall difficulties were compounded by bad weather.

Its total revenue was down 2.4 percent to $241m, because of lower milk, livestock and carbon credit revenues.

A more complex accounting measurement known as EBITDAR was also down to $34m from $48m a year ago.

But that was in line with expectations.

The company chairman Warren Parker has vowed to do better.

"While our net profit suffered from the impact of the valuation write downs, and our revenue was impacted by lower milk production due to drought, the continued focus on reducing costs, and generating acceptable returns will be a key focus in the current year," Dr Parker said.

In a statement, the Associate State Owned Enterprises Minister Shane Jones said he and other shareholding recognised the challenges facing Landcorp, which were reflected in its annual result.

Mr Jones said it was disappointing Landcorp had posted a loss, but he and the other ministers had confidence that positive steps were being taken to strengthen its position.

However, he acknowledged Landcorp had been able to return a modest dividend to the Crown for the second year running.

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