Invercargill-based Blue Sky Meats is reporting annual net profit of $282,000, only about a fifth of the previous year's level as widespread challenges confront the industry.
The result was achieved on operating revenue down 11 percent to $79.35 million and compared with net profit of $1.53 million in the year to March 2007.
Chairman Graham Cooney described the latest result as "very disappointing".
"It reflects a conscious decision to return a higher than normal amount of the company's income to farmer suppliers due to the intense competition faced by the industry in terms of land use alternatives," he said.
As well as the effect of new international reporting standards, the result was due to a poor first half with lower throughput in all stock classes and non-existent margins in lamb and sheep trading, Mr Cooney said.
The second half year was better but was affected by extra costs associated with a higher kill aimed at meeting requests from regular suppliers for more killing space. That was combined with tight margins on lamb and sheep.
Planned one-off costs associated with the company's succession strategy added to costs during the financial year, he said.
No dividend was being recommended which, considering the dividend had been equivalent to 10-15 cents per share during the previous seven years, was "not a good outcome".
"However, the short term challenges facing both the company and the sheep meat industry mean that directors are taking a responsible attitude."
During the first six months, the number of stock numbers slaughtered fell 10.8 percent as a result of intense competition for livestock and fewer bobby calves than normal, Mr Cooney said.
In the new sheep season, dry conditions had added to a demand for space that was difficult to meet.
Despite the difficulties in the year to March, the new financial year had started "very positively", with the company finally able to take advantage of extra numbers being killed.
At the same time challenges facing the industry were "immense", among them competing land uses and significant farm cost increases combined with the looming imposition of emissions trading costs.
The report comes at a time of major change in the meat industry.
Today Silver Fern Farms announced a proposal to shut down two sheep and lamb slaughter chains in Canterbury, with the loss of about 250 jobs, although about 70 redeployment opportunities are expected to be available at nearby plants.
Silver Fern Farms chief executive Keith Cooper said the closure was the final instalment of the company's Project Rightsize for 2008, designed to align processing capacity with reduced supply.
Silver Fern's 9000 shareholders are also to vote on a proposed $220m deal under which rural servicing firm PGG Wrightson would buy a 50 percent stake in Silver Fern.
