Wellington, July 30 NZPA - Farmer cooperative Livestock Improvement Corporation (LIC) reported a 43 percent fall in underlying net earnings to $9.1 million, after the company's key earnings period last spring coincided with a low point for the dairy industry.

Revenue at the dairy herd improvement organisation for the year to the end of May was 9.2 percent lower than a year earlier at $136.4m, and net profit fell 66.2 percent to $8.3m.

Reduced sales volumes resulted in a decrease in earnings before interest and tax of $4.2m or 20 percent to $16.8m, the company said today.

LIC chairman Stuart Bay said the bulk of the company's income was derived during the spring peak of each season and, in 2009, that was a low point for the industry with prospects for payout in the range of $4.50 to $5 per kg of milksolids.

"The resulting concern and farmer caution was reflected in reduced sales volumes and revenue for LIC," he said.

"In that context, this year's result was an extremely good one, reflecting constraint and containment across the entire business and as an outcome of working closely with our farmer customers."

A support package to help farmers manage through the downturn, including additional discounts and deferred zero interest payment terms, cost about $2.5m during the year.

"Our priority was on preserving relationships with customers and protecting our business; we achieved on both counts," Mr Bay said.

A cost cutting exercise saw all budgets revised and a nil pay increase for all LIC staff.

A dividend to shareholders of $7.3m represented 80 percent of underlying earnings, with 8.65c per cooperative control share and 23.5c per investment share.