Blue Sky Meats' return to profitability spells an end to
about two and-a-half years of turmoil in the international
sheep meat industry, chairman Graham Cooney says.
Directors were ''quite rightly proud'' of how the
Southland-based company had not only survived but moved
forward in a time when the sheep meat processing and
exporting industry had reputedly lost $200 million, he said.
The company has recorded a $1.946 million after-tax profit
for the year to March.
That compared with a $3.8 million loss for the previous year,
a $449,149 loss in 2012 and a $3.6 million profit in 2011.
The management of the early part of the financial year
ensured the residues of the ''disastrous'' previous 18 months
were finally erased, Mr Cooney said, in the company's annual
The remainder of the year was a ''definite return to
normality''. Profitability was steady and it reflected a
market for the company's products that was strong and
However, Mr Cooney said industry challenges had not changed
and, if it was to move forward, the status quo was not an
The vast majority of the industry problems were in New
Zealand, not offshore.
The offshore challenges could only be fixed when the New
Zealand problems had been ''dealt to''.
The industry was production-led but every successful
sustainable industry in the world was market-led, he said.
The financial advantages of having a properly planned
processing industry were at least $5 a head of lamb or
The lack of trust between many suppliers and their meat
company was a ''mirror image'' of what happened between
exporters from New Zealand and offshore importers.
Transparency at all levels was the only way to solve the
mistrust issue, he said.
Late last year, southern-based co-operative Alliance Group
revealed it entered into negotiations over a potential
purchase of Blue Sky Meats, but no agreement was reached.
Mr Cooney said once an approach had been made, the directors
of a public company could not ignore it and must investigate
the offer, rejecting it only if there were ''a number'' of
material concerns that made the offer unacceptable.
Negotiations with Alliance Group were respectful and amicable
but, after two months, the board of Blue Sky Meats determined
the offer was not in the best interests of its shareholders
There was ''no intention'' by either party that the
discussions were to become public.
''The fact that occurred was outside the control of Blue Sky
Meats,'' he said.
Mr Cooney said Blue Sky Meats had made some ''game-changing''
moves over recent years, including a planned approach to
maintaining a strong balance sheet.
Investment in a rendering plant and a skin salting operation
had added significantly to profitability, while a carefully
considered approach to the rapidly expanding Chinese market
was now paying dividends.
Two years ago, the company recognised the reality of lower
stock numbers and reconfigured its shifts.
That resulted in improved profitability while maintaining
individual worker incomes, he said.
Lean Meats, which has a plant in Oamaru, has announced a
record pre-tax profit for the 2013 year of $2.6 million - a
$6.2 million reversal on the previous year.
In the company's latest newsletter, chairman Rob Buddo
described it as a ''satisfying'' result, saying the company
had ''made a quantum leap forward''.