Fine weather dents Allied Farmers' earnings

A combination of gloomy economic conditions and good weather have put a big dent in the profits of rural services company Allied Farmers.

The Taranaki-based company saw its profit drop by more than 50 per cent on the same period last year - to just $758,000.

"Good weather has reduced demand for farm inputs, while a drop in confidence across all farming sectors has discouraged spending," said chairman John Loughlin.

The warm summer meant farmers had plenty of feed for their animals.

While that sounds like good news, it has a double whammy effect on the bottom line for rural services companies.

Sales of supplementary feeds drop off and livestock sales are also affected as farmers are able to hold on to beef cattle and sheep.

They are also able to be less ruthless in their culling of dairy cows.

Falling prices, particularly in beef and lamb, were providing extra incentive to keep animals on the farm longer.

Loughlin said the results were disappointing but that they had been expected and were signalled to the market in December.

Those comments were borne out by the market reaction - the shares were steady at $2.10 yesterday.

While the tough conditions had affected group merchandise, livestock, real estate and wool divisions, the farm finance and rural processing had produced good results, Loughlin said.

The fundamentals of the company were still in good shape and it is expected that the second half of the year - traditionally the busier time of year for rural services companies - would produce a much improved result.