Fonterra’s disappointing performance

Fonterra’s interim result announcement contains confirmation of the farmgate milk price forecast of $4.70, but a reduction in the added value dividend.

Landcorp’s Carden optimistic despite low half year profit

The state owned farmer Landcorp last month reported a substantial drop in both revenue and profit for the six months ended 31 December last year, but CEO Steve Carden is still very positive about future prospects and the importance of Landcorp as a farming business.

MIE launches red meat sector plan

Tuesday saw the launch of Meat Industry Excellence’s report Red Meat Sector – Pathways to Long Term Sustainability to a relatively small group of invited attendees in Wellington.

MIE red meat sector report to be launched

Tuesday sees the public release of the Meat Industry Excellence industry study ‘Red Meat Sector – Pathways to Long-Term Sustainability’ at a launch function in Wellington. The study, funded with the assistance of a grant from Beef + Lamb New Zealand, was commissioned in the middle of last year; it was initially due for release by the end of October, but concerns about the robustness of the findings delayed the process.

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ANZCO’s profit disclosed in Itoham’s statement

Japanese food company Itoham Foods announced last week an increase in its shareholding in New Zealand meat processor and exporter ANZCO Foods from 48.28% to 65%. As a result of the transaction it will be able to consolidate ANZCO’s revenues and earnings into its annual accounts.

 

$40 million worth of shares are being bought from three entities: another leading Japanese food manufacturer Nippon Suisan Kaisha, chairman Graeme Harrison, and JANZ Investments, owned by Graeme Harrison and ANZCO staff members. The sale will see the minority shareholders reducing their shareholdings on a pro rata basis with Harrison’s effective holding falling from approximately 20% to 14%.

 

A side effect of the announcement to the Tokyo Stock Exchange was the disclosure of ANZCO’s annual result for the 2014 year which would not normally be announced to the Companies Office until late March. This demonstrates a small drop of $25.6 million (1.92%) in sales, but a two thirds reduction in operating income and a $6.2 million or 50.8% fall in net profit. This fell from $12.22 million to just over $6 million.

 

The figures do not give any details of the reasons for the profit reduction, although a 9.4% increase in total assets suggest an increase in inventories may be a factor. The profit represents a 0.48% return on sales and 2.7% on net assets which is less than ideal, albeit a continuation of ANZCO’s track record of posting a profit, apart from 2012 when the whole meat industry lost money.

 

The main question is why Itoham has decided to increase its ownership percentage in a New Zealand meat exporter now when it has been content to remain a fairly passive shareholder since 1995 when Harrison put together a consortium of investors to buy ANZCO from the Meat Board and Huttons Kiwi.

 

The answer appears to be a combination of factors, notably Harrison’s stated intention to retire at an appropriate time presumably in the relatively near term. In 2009 Mitsubishi Corporation became Itoham’s largest shareholder which can now access 28,000 staff in Mitsubishi’s Living Essentials Group involved in all stages of the distribution chain throughout the world with a focus on emerging markets.

 

Itoham’s announcement to the Tokyo Stock Exchange signals its intention to grow its business outside Japan by becoming “the most trusted manufacturer of processed meat in Asia”. Itoham’s investment with ANZCO is seen as an integral step to achieving this goal. ANZCO is seen as an ideal platform for expanding red meat sales to the world’s growth markets which contrasts with Itoham’s previous focus on the Japanese domestic market for sausage and processed meats.

 

Correspondingly the main business focus of Nissui which also bought its shares in 1995 is on marine products including a 50% shareholding in Sealord, processed foods and chemicals. Therefore its holding in ANZCO is less aligned with its core businesses.

 

At this point there will be no change to ANZCO’s board of directors or management with Graeme Harrison and Mark Clarkson remaining as Chairman and Managing Director respectively. In time it seems inevitable that consolidation of ownership and retirements will result in further changes.

A rare breed in the meat industry

AFFCO is establishing an encouraging trend among its management ranks with three women in senior roles as plant and technical managers. Ann Nuku and Rebecca Ogg are plant managers of AFFCO Manawatu and Horotiu respectively, while Emma Fitzgerald is the company’s Technical Manager.