You are using an older browser version. Please use a supported version for the best MSN experience.

Alliance profit up in tough meat market

NZ Newswire logoNZ Newswire 10/11/2016 Paul McBeth

Alliance Group, New Zealand's second-largest meat cooperative, has boosted annual earnings 28 per cent as plans to overhaul the business reducing debt and automating processing cut costs more than offsetting weak meat prices and a strong kiwi dollar eroding revenue.

Pre-tax profit rose to $10.1 million in the year ended September 30 from $7.9m a year earlier, the Invercargill-based company said on Friday.

Revenue fell to $1.36 billion from $1.49b a year earlier, though plans to improve the operations delivered gains of $56m, ahead of the budgeted $34m and debt was slashed to $41m from $129m.

"The weakening of market prices and global volatility over the year reduced group revenues, but the value created from our strategy projects meant the cooperative was able to act as a buffer," chief executive David Surveyor said.

"We would have liked to have absorbed more and remain committed to finding ways to pay farmers more for their livestock."

New Zealand's meat sector has gone through a major shift this year with the country's biggest processor, Silver Fern Farms, getting approval to pool its assets into a new entity effectively controlled by China's Shanghai Maling Aquarius.

More recently Blue Sky Meats said China's Heilongjiang Binxi Cattle Industry Co was poised to make a takeover offer for the Southland-based firm.

Alliance has changed its capital structure to get its farmer shareholders to share up relative to their supply, and introduced new automated systems to improve its operations, something it says it will keep doing.

The company had shareholder funds of $302.5m, down from $308.9m.

The cooperative raised its dividend to its 5000 or so farmer shareholders to $9.8m, having not paid a distribution last year.

image beaconimage beaconimage beacon