NZ Farming Systems Uruguay, the farm manager that was recently taken over by Singaporean commodities company Olam International Ltd, is running about 10 per cent below its target milk production.
Chief executive Alastair de Raadt told shareholders the company lifted cow numbers 18 per cent and production per cow
6 per cent in the three months ended September 30 from the same period a year earlier, short of Farming Systems' expectations.
The company expects to produce about 90 million litres of milk in the 2011 financial year, short of its 100 million litre target.
"Milk production volumes are approximately 10 per cent below budgeted levels, and are likely to continue to remain so," de Raadt said in speech notes posted on the NZX website.
"Milking herd numbers are in line with budget, so the main issue has been individual cow productivity."
Last month, Olam swept up 78 per cent of Farming Systems in its 70 cents-a-share offer as it seeks to vertically integrate dairy assets including a stake in Open Country Dairy Ltd. The Singaporean company will inject new equity into the South American farm manager, which is short on cash, probably through a rights issue.
The cash injection will fund an increase in supplementary feed for livestock, an investment in more sheds, irrigation and fertiliser.
Olam will appoint four directors to Farming Systems' board, while John Parker will retain the chairmanship.
The shares sank 3.2 per cent to 61 cents in trading today, and are up 31 per cent this year.
