19 Dec 2008

Milk price fall hits NZ farms in Uruguay

9:44 am on 19 December 2008

New Zealand Farming Systems Uruguay has downgraded its earnings forecast in the face falling milk prices and dry weather conditions.

The dairy farm developer has revised its full year earnings guidance to a loss in the range of $US7 million to $US11 million.

Analysts had been expecting a loss of between $US8 million and $US10 million before interest and tax.

The is converting about 35,000 hectares of land in South America to New Zealand-style farms.

Chairman Keith Smith says revenue was affected by milk prices which had fallen to 20 US cents a litre.

An abnormally dry November was also a factor.

Investors have reacted strongly to the company's gloomy profit forecast, sending shares on a 20% tumble on Thursday to trade at 60 cents.

Keith Smith said despite variations in short-term performance arising from market volatility the board remains satisfied with the company's development.