Forecast Earnings before Interest, Tax, Depreciation and Revaluations (EBITDAR) – Financial Year Ending 30 June 2020

Landcorp Farming Limited advises that it has updated its forecast EBITDAR for the financial year ending 30 June 2020. It now expects full year EBITDAR of between $63 million and $68 million. This compares to the previous forecast in place at 28 February of between $73 million and $78 million.

The change to forecast EBITDAR reflects downward revisions to forecast livestock and wool prices, and adverse weather for farming in some key parts of the country. Higher than normal demand for space at meat processors due to dry conditions and China market disruption due to Covid-19 have reduced livestock returns from the high levels of late 2019. Covid-19 is forecast to be a complicating factor in getting product to market and will push some volumes out later in the season. Dry conditions in the central North Island, drought in Northland, and wet conditions in parts of the South Island have had a small adverse impact on the previous forecast milk production. Higher operating expenses (particularly for feed), reflect these conditions. Nevertheless, forecast EBITDAR is significantly higher than that of the prior year which was $48m on a like for like basis[1].

The forecast assumes there will be no material adverse weather events; disadvantage from Covid-19 restrictions, significant strengthening of the New Zealand dollar or other material changes to market prices before 30 June

[1]The 2019 EBITDAR has been adjusted to account for the impact of the new accounting standard IFRS 16 which has been adopted for the 30 June 2020 financial year.