Silver Fern Farms’ result shows benefit of capital injection

Silver Fern Farms Limited has posted an improved annual result for its first year with its new Chinese partner, Shanghai Maling, which invested $260 million to acquire a 50% share of the meat processor and exporter. Revenue for the 2017 financial and calendar year, following the change in balance date from the traditional meat industry year to September, was on a par with 2016, but the NPAT of $15.4 million was a huge increase on the previous year’s $30.6 million loss, although not as good as the 2015 result of $24.6 million.

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Silver Fern Farms comes crashing back to earth

Chairman Rob Hewett wasn’t joking early last year when he warned that the 2016 result would not be in line with budget. The actual result was a $30.6 million after tax loss compared with a profit of $24.5 in 2015, although a significant part of the latest year’s result was attributable to a $22.4 million non-cash accounting writedown related to the anticipated Shanghai Maling investment. Nevertheless, at a more comparable level the net pre-tax operating profit remained in negative territory, producing a $7.5 million loss against $30.8 million in the previous year.

Alliance result not so good on closer inspection

At first sight the Alliance profit of $10.1 million for 2016 appeared to be a small but definite improvement over the previous year’s result when no supplier distribution was made. In contrast the directors have decided to pay $9.8 million to their suppliers, although about a third of this will be retained to ensure suppliers share up to a shareholding consistent with their livestock supply volumes. Therefore the final post tax profit was a bare $100,000.

Latest result suggests ANZCO floundering

ANZCO Foods has just released its annual result for the 15 month period ended 31 December which shows a reduced profit compared with its 12 month 2014 performance. Pre-tax net profit was $5.702 million ($7.128 million in 2014) while NPAT was $4.49 million, down more than 50% on the equivalent 2014 result which included part of the tax benefit from the 2012 loss.

Season has contrasting impact on Silver Fern Farms and Alliance

The two biggest meat processors had contrasting experiences during the 2015 season to judge by their annual results and accompanying comments. There is no doubt Silver Fern Farms found life easier than Alliance, with respect to the year in question. SFF must also have heaved an enormous sigh of relief after its improvement from the previous three years.

Silver Fern Farms heaves sigh of relief

This week’s announcement by Silver Fern Farms of an unaudited pre-tax profit of $5-7 million for the last financial year signals a massive improvement on the substantial losses of the two previous years. But in spite of the $100 million debt reduction, it does little more than provide some breathing space for the company to review its future capital structure options.

Silver Fern Farms bullish in spite of $31 million loss

Hard on the heels of Alliance’s announcement, Silver Fern Farms has also come out with a big loss, reinforcing the belief that all meat companies have had a bad year. SFF’s result was a loss of $31.1 million compared with a profit of $30.8 million before extraordinary items the previous year.