Alliance focused firmly on future

Murray Taggart.
Murray Taggart.
Alliance Group will become a "very different company'' with a very clear focus on improved profitability and a more strategic view of the world it operates in, chairman Murray Taggart says.

Addressing Alliance Group's annual meeting in Oamaru yesterday, Mr Taggart said 2015 had been a year of change, for both the company and the industry.

Chief executive David Surveyor, who brought fresh thinking and management skills, had driven a major review of the company's operations.

It was undergoing significant internal change that the board was confident would lift the performance of the co-operative "dramatically''.

"Much of the change occurring within Alliance Group will not immediately be obvious from the outside looking in. Rest assured, Alliance will be a very different company moving forward,'' Mr Taggart said.

David Surveyor.
David Surveyor.
Over the past year, five of Alliance Group's competitors experienced significant shareholding change, with four welcoming Chinese shareholders.

The most notable was the proposed Silver Fern Farms joint venture with Shanghai Maling, which is awaiting regulatory approval.

"We do not see any of these changes dramatically changing the landscape we operate in. The industry will remain intensely competitive and only well-run businesses will survive and prosper, regardless of their ownership structure,'' he said.

One positive impact of the Shanghai Maling deal had been to "effectively kill off'' the politics that had dogged the industry for years.

"Finally the industry is being publicly judged through a commercial lens rather than a political one. We may even be moving into an era of celebrating successes rather than a continual focus on the negative,'' he said.

The company understood the impact drought conditions and weak international market pricing were having on shareholders.

Recent sharp declines in international prices were disappointing. Unfortunately, those events were beyond the company's control, he said.

Mr Surveyor said there was no doubt the new processing season started as a challenging one.

Many farmers were dealing with dry conditions and Alliance Group was adding capacity where it could, with shareholders getting priority for space.

While farmers were probably frustrated, the company was struggling to beat global market forces when it came to pricing.

There were challenging markets for lamb and sheep and they were likely to remain difficult in the immediate future.

The $100 forecast for an 18kg lamb, made in October, had proven incorrect.

Prices and weights would be down but if global market prices recovered, Alliance would raise prices, he said.

It had been a very important year for the company, with the decision to "get back to its roots'' as a co-operative.

It was very clear on the business strategy.

It was starting to get traction around marketing and was trying to find ways to extract more value from animals.

It was very interested in the development of new products and markets.

Former Alliance Group chairman John Turner acted on behalf of his son Peter, who was not at the meeting, in asking when farmers were going to receive a $6.50 schedule for their lambs and when the company was going to make a $30 million profit.

Mr Surveyor said he could not tell Mr Turner what global markets were going to do, while Mr Taggart said the company believed a $30 million profit was "totally inadequate'' for a business of its size.

Jared Collie (Dipton) and Jason Miller (Southdown) were elected to the board, replacing Murray Donald and Doug Brown, who have retired.

Mr Miller, a founding member of the Meat Industry Action Group, was elected to the board in 2007 but dumped by shareholders in director elections in 2013.

One of the unsuccessful candidates, Mark Adams, of Fairlie, said he got the sense that Alliance Group was a "sleeping giant'' that needed to throw off some of its "southern reserve'' and tell its story a bit better.

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