Pāmu Farms of New Zealand (“Pāmu”) made a net profit after tax (“NPAT”) of $8 million for the half year ended 31 December 2020. This compares to NPAT of $68 million for the half year ended 31 December 2019.
Pāmu uses EBITDAR (earnings before interest, tax, depreciation, amortisation and revaluations) as a key performance measure. This measure excludes components of NPAT such as fair value gains on livestock ($17m), fair value gains on financial instruments ($2m), depreciation & amortisation expenses ($13m) and net finance expenses ($11m).
EBITDAR for the half year was a gain of $14 million compared to a gain of $22 million in the half year to December 2019.
The $8 million reduction in EBITDAR reflects a decrease in farm operating revenue of $5m which is predominantly due to lower market prices for the company’s red meat products. The lower revenue result is partially offset by lower Operating expenses ($3m below the comparative period) due to tight cost control in response to the uncertain economic environment. Savings were made on casual wages, fuel costs, travel costs and professional services.
A significant reason for the lower EBITDAR result is that the period to December 2019 included a “one-off” gain of $6m realised from the sale of shares in the Westland Dairy Co-operative. Excluding this amount, the EBITDAR result to December 2020 is $2m below the figure for the prior period.
Pāmu is currently forecasting a full year EBITDAR of between $45m and $50m compared to its original forecast of $35m.
The change to forecast is largely a result of higher than expected forecast milk payments partly offset by lower than expected forestry revenue.
This forecast assumes that there will be no adverse weather conditions; no deterioration in the foreign currency; and that current market prices hold through the season.
Click here for our Continuous disclosure 2020