Meat company results only average for 2017 – will 2018 be any better?

ANZCO’s lacklustre result for 2017, posted last month, concludes the financial reporting for last year by the three major processors which publish their results. ANZCO’s pre-tax profit was $1.8 million which compares disappointingly with Alliance Group’s $16.7 million profit and Silver Fern Farms Cooperative’s 15 month profit of $7.8 million.

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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.

Changing export markets give confidence in industry’s future

The global market for New Zealand’s meat exports and exporters is undergoing quite a rapid change, judging by movements in the industry’s latest quota entitlements and market destinations. The differences between exporters and markets over a ten and five year period provide an interesting snapshot of the relative position of the meat companies and the impact of changing market dynamics.

Meat company choice clearer than it’s ever been

November used to be the month when we could get a comprehensive idea of the financial state of the meat industry because annual results were published in quick succession by three of the major processors: Alliance, Silver Fern Farms and AFFCO. When AFFCO was absorbed as a wholly owned subsidiary of Talley’s, there were still the two cooperatives to provide a comparison, but now SFF’s balance date is 31^st December. So we must now wait until March to find out about ANZCO and SFF. This means Alliance’s result is the only one which can give a factual record of the traditional meat year, while it is still reasonably fresh in the mind.

First chilled shipments to China

According to a press release from SFF the company’s first sea container leaves this week for arrival early next month, claimed by the company to be the first sea freight consignment of chilled product to the Chinese market which has only recently opened up to New Zealand meat exporters. However, I have since been informed that the first shipment from Greenlea arrived on 18^th August and a chilled container of AFFCO product is already on the water, arriving on Friday 1^st September, with a container of chilled mutton being shipped next week.

Fairton closure inevitable

Wednesday’s announcement by Silver Fern Farms of the proposal to close the company’s Fairton plant was in many ways inevitable. Even the workforce appears to have been resigned to the probability for several years. Sad as it is for workers and the Ashburton community, it is better to front up to the certainty than to have to wait for the axe to fall.

Fairton closure unfortunate but inevitable

Silver Fern Farms decision to close its Fairton plant did not have much to do with Shanghai Maling’s investment, but was only a matter of time. Even the workforce had apparently come to accept the inevitable after seeing lamb numbers through the plant decline sharply from more than 1 million in 2010 to less than 500,000 last season and 325,000 in the latest six months.

Heavy market share losses affect Silver Fern Farms’ financial performance

In recent weeks there has been an exchange of views about PPCS’s acrimonious takeover of Richmond in 2003. Keith Cooper, ex CEO of the renamed Silver Fern Farms, emerged from anonymity in Middlemarch to castigate the appointment of Sam Robinson to the board of Silver Fern Farms as the Shanghai Maling representative. He was critical of Richmond’s rejection of the original approach by PPCS to buy the Freesia Investments shares from the Meat Board in the mid-1990s and Robinson’s role as Richmond’s chairman.

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.

MIE tried hard, but couldn’t make a difference

MIE’s decision to disband after three years trying to persuade the red meat sector it was going to hell in a handcart has come as no surprise. But the organisation’s founders and directors are not unnaturally disappointed at their inability to gain support for their plan to solve the endemic problems of the industry.