$18m special dividend for LIC shareholders

The $18.5 million payout is made up of proceeds from the sale of shares in UK company National Milk Records, completed in late 2023.

The fully imputed dividend will be paid to LIC shareholders on February 23.

LIC held a 19.75% stake in National Milk Records, a UK-based company that invests in milk quality, herd health and genomic testing services and generates data for farmers.

The special dividend announcement was part of LIC's half-year results released last week.

The co-op's total revenue for the six months ending November 30, 2023, was $172m – 3% lower than the previous year.

Net profit after tax topped $29m, down 13%.

Despite the drop in numbers, LIC says it remains on track for a fullyear underlying earnings forecast range of $17-22 million, unchanged from the market update in August 2023.

New LIC board chair Corrigan Sowman says the co-operative’s strong cash position provided a degree of resilience and, relative to the current challenging economic conditions, he is pleased with the result.

The decreased revenue was driven by the lower milk price environment, as well as credits provided to farmers because of a recent semen quality issue.

The co-op paid out $2m to farmers who were provided bad sire semen.

“Farmers have had a challenging year as they’ve had to tighten their belts in response to a lower milk price payout,” says Sowman.

“The stakes are high, but they continue to show resilience.

“As a co-op, it’s our job to support farmers to navigate these challenges providing them with the right tools to breed the most sustainable and profitable herds, now and into the future.

“On behalf of the board, we would like to acknowledge just how challenging this year has been, and extend our appreciation to farmers for their ongoing support and commitment to their co-op.”

Sowman paid special thanks to farmers who showed “resilience and patience as we navigated our way through the recent semen quality issue”.

Two batches of bad semen were delivered to 1127 farms around the country; semen collected, processed and packed into straws and then sent to farms on October 15th and October 21st failed to pass quality control tests on day three. The straws were used over three days to mate herds and resulted in lower pregnancy rates. Fifteen of the 39 straws collected on October 16th and five of 31 straws collected on October 21st were affected.

Sowman says LIC had not experienced an issue like that before.

He says LIC’s investigation into the cause of this is ongoing.

He noted that the costs of the credits to farmers have been accounted for in the half year result.