Australia’s first listed dairy farmer Aus Dairy Farms is expecting a big surge in earnings this year.

EBITDA earnings for the 2018 financial year were now expected at $800,000 to $1 million — an 18 per cent to 48 per cent increase from last year’s $673,000.

The shares were up 5 per cent to 21c by 11.30am AEST Tuesday.

Aus Dairy (ASX:AHF) said in March it was converting six of its farms to organic production to get out of the commodity milk rat race.

That figure however is just for the farms — and doesn’t include the cattle which produce the milk Aus Dairy sells.

“Dairy cattle prices are also reactive to milk prices offered to farmers by processors and farmers buy livestock when milk prices increase and sell when milk prices do not provide any incentive to increase milk production,” the company said.

Changes in livestock valuations aren’t included in the forecasts but are included in the full year accounts as realised or unrealised gains or decreases.

“The farms are physically in the best condition since they were acquired between 2012-2014, with capital expenditure on drainage and water conservation as well as paddock, laneway and expansion of storage upgrades all combining to deliver proceeds to the bottom line on a long term basis,” the company said.

Aus Dairy banked $4.2 million in customer receipts last quarter — for a total of $16.7 million with one quarter to go.

It had $4 million in the kitty at the end of March — along with a $10 million loan facility — and planned to spend $5.5 million this quarter.

Aus Dairy Farms has been contacted for comment.

 

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