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FirstFarms sticks by breakeven forecast, despite dairy, grains hopes

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FirstFarms stood by expectations of scraping to breakeven for 2016, at an operating level, even as it unveiled improved profitability in the latest quarter, as improved production made up for disappointing prices.

The Copenhagen-listed group, which operates farms in Eastern Europe, unveiled an operating profit of DKK2.12m for the April-to-June quarter – a 28% jump year on year, and also well above the profit of just DKK1,000 for the January-to-March period.

FirstFarms, which reported revenues down 11.9% year on year at DKK13.4m, said that milk prices had been "lower than expected", as had grain values.

However, the group prices achieved on oilseeds which were "higher than budgeted", and FirstFarms unveiled cause for optimism ahead for both dairy and grains operations.

'Yields above budget'

In dairy, "it is estimated that the decrease in the milk price is curbed and there are trends to price increases," the company said, extending the round of more upbeat comment on dairy values, which have staged a recovery on international markets.

In grains, "the harvest yields for the autumn crops have been higher that budgeted, and yields above budget for the spring crops are also expected," said the group, whose crops are grown in the main in Romania.

"All in all, the crops look significantly better compared to same period in 2015."

The comments tally with observations from the European Union's Mars agrimeteorology unit, which last week forecast a 19.4% recovery to 3.81m tonnes per hectare in Romanian corn yields this year.

Land sale

FirstFarms restated a forecast only of breaking even over 2016 at an operating level despite the improved result in the latest quarter, and the prospect of stronger milk prices and autumn harvest yields.

Even so, that would represent a sharp improvement on 2015, for which the group reported an operating loss of DKK14.7m, hurt by drought damage to crops.

FIrstFarms said that - including initial proceeds from the DKK375m disposal to AP Pension of 3,000 hectares of Romanian farmland, plus buildings, under a sale and leaseback deal - it would record a 2016 operating profit of DKK26m.

FirstFarms shares stood unchanged at DKK45.50 in afternoon deals.


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