Meat processor Alliance Group plunged into the red in the
year ended September, reporting its first operating loss in 20
The Invercargill-based co-operative is in the midst of major
restructuring and alignment of its operations.
It reported an operating loss before restructuring costs of
$57 million for the period, down from a profit of $20.7
million in the previous corresponding period.
Restructuring costs this year were $13.5 millon compared with
$19.4 million in the pcp.
Although the figures were not provided by Alliance, it
appears the group received tax credits this year as the
reported loss after restructuring costs was $50.8 million
compared with a loss of $9 million last year.
Turnover was down to $1.4 billion from $1.5 billion.
This year's result included the restructuring costs
associated with ending sheep and lamb processing at the
Alliance chairman Owen Pool said the result was disappointing
but it reflected a substantial change in the export markets
in the past 12 months, particularly for sheep meat.
Export market prices for lamb suffered a sharp fall in key
markets due to the widespread economic crisis.
"The increasing value of the New Zealand dollar through the
period exacerbated the impact of the price decline."
Alliance accepted that many exporters and processors, like
itself, did not respond to the changing economic environment
fast enough and, in an intensely competitive industry,
continued to pay too much for livestock for too long, he
Despite the significant loss, and after providing for the
restructuring costs associated with ending sheep meat process
at the Mataura plant and the closure of the Sockburn plant,
the company's balance sheet remained robust.
Those decisions, as well as investments in beef processing at
Mataura, venison processing at Smithfield and rendering at
Lorneville, would provide ongoing cost savings and benefits,
Mr Poole said.
"Alliance Group anticipates a much improved financial result
for the 2013 year."
The company was also making changes to its procurement
policies to reinforce its commitment to loyal
shareholder-suppliers, he said.
Chief executive Grant Cuff said that despite the challenging
economic environment, stability was returning to the market
and recent events gave Alliance and its 5000 shareholders
cause for optimism.
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China continues to show strong growth, particularly with
higher-value products being added to the offer. The first
shipment of "Pure South" lamb had arrived in Brazil. Alliance
believed Brazil offered much potential given its natural
affinity for red meat, a growing population and an emerging
The recent announcement of an exclusive deal to supply
chilled New Zealand lamb to United Kingdom retailer Marks and
Spencer was also good news for suppliers, Mr Cuff said.