KEY POINTS:
North Island farm services and finance company Allied Farmers has posted a full-year net loss of $3.3 million following the closure of its timber mill, which wiped $4 million off its balance sheet.
But the listed co-operative, which caters to a large number of dairy farmers, said it expected improvements in the coming season, thanks to the increased Fonterra payout and declining New Zealand dollar, and says its finance arm is robust enough to trade through the sector's difficulties.
The result for the year to June 30 - which compares with a $1.3 million net profit the year before - follows the disestablishment of Allied Farmers' underperforming milling operation Allied Pine in May, brought on by the high kiwi dollar and weak US prices.
"You're never happy when you've had to write off $4 million for closing a sawmill but this is an operation that Allied Farmers has owned for the last four years," chief executive David Bale said.
"It's never made a dollar and like all the other mills in New Zealand it got caught with the rising dollar and the softening lumber price in the US so the board made the decision in May to exit."
However, Bale said the group's continuing operations had achieved earnings before interest and tax (ebit) for 2007 of $5.7 million, a 64 per cent increase on the previous year's figure of $3.5 million in 2006.
In response to an NZX inquiry regarding its finance company's compliance with continuous disclosure obligations, Allied Farmers said: "We are strongly placed to weather the change of fortunes in the finance sector and look forward to prudent growth."
Allied Nationwide Finance, formed from the merger of Allied Finance and Nationwide Finance, which incurred a one time cost of $1.4 million, had a loan book of $240 million and $41 million in cash in the bank on July 24, Bale said.
Shares closed up 15c at $1.65.
ALLIED FARMERS
Year to June 30
Revenue
2007 - $108m
2006 - $85m
Net profit (loss)
2007 - ($3.3m)
2006 - ($1.3m)
