Repairs under way in Wharekōpae Pāmu farms after Cyclone Gabrielle caused damage in the area. Photo: Supplied / Pāmu
State-owned farming company Pāmu has downgraded its profit forecast due to the impact of Cyclone Gabrielle and softer dairy prices.
The company - which runs forestry, dry stock farms as well as dairy farms - expects a full-year net operating profit of between $34 million and $44m - down on the original forecast of $55m.
Chief executive Mark Leslie said Cyclone Gabrielle effected 24 of Pāmu's farms.
"Our early assessment of the damage caused by Cyclone Gabrielle is $6.5 million over two years, with $2.5 million falling into the current financial year. The cost will be a mixture of operating and capital expenditure," Leslie said.
Cyclone Gabrielle caused damage to Pāmu's Opouahi farm. Photo: Supplied / Pāmu
"Pāmu expects livestock revenue to be $14.3m lower due to a combination of Cyclone Gabrielle, softer sheep prices, and lighter animals from Southland and Te Anau farms which have experienced dry conditions the past two summers."
Cyclones exacerbated the situation, with wet conditions in the North Island requiring lower margin store stock sales versus planned animal sales to processors, Leslie said.
The change to expected net operating profit is also due to the reduction in forecast revenue from the dairy sector.
The fences at Pāmu's Edenham farm has been damaged by Cyclone Gabrielle. Photo: Supplied / Pāmu
The forecast milk price falling from $9 per kilogram of milk solids in February to $8.50 per kilogram of milk solids, combined with lower-than-expected milk production had reduced forecast milk revenue by $14.6m, Leslie said.
"Lower milk production mainly occurred in the first half of the season due to wet spring conditions impacting pasture growth although a wet summer has seen a small recovery in milk production."
Offsetting the lower forecast milk price is a forecast $13m gain on the organisation's milk futures hedge position.
"Despite these challenges, forecast Net Operating Profit remains significantly higher than $22 million the year prior. This forecast obviously assumes there will be no adverse weather conditions over the remainder of the season, material changes in foreign exchange rates, or market prices," Leslie said.