The co-operative yesterday reported earnings before interest and tax of $18 million in the year to September 30, compared to $36.3 million for the previous corresponding period (pcp).
This translated to a net operating loss of $800,000 ($5.4 million profit pcp) before accounting for non-recurring costs of $7.2 million (a gain of $42.1 million pcp).
Turnover was hit hard by unfavourable exchange rates, with the New Zealand dollar moving 23% against the euro and 15% with the United States dollar and pound sterling during the year, which was responsible for most of the $204 million decline in income, from $2.014 billion pcp to $1.810 billion.
This, coupled with lower stock numbers, put pressure on margins.
SFF chairman Eoin Garden said the stronger balance sheet and equity growth from 55.8% pcp to 61.3% set a foundation for building the business.
He said SFF had working capital loans of $117 million and no core debt, while repaying $75 million in bonds and restructuring its banking syndicate would reduce annual interest costs by $3 million.
In the past three years, SFF had reduced debt by $215 million, closed three plants and six lamb chains and exited its Brooks of Norwich operation in the United Kingdom.
Chief executive Keith Cooper said the co-operative had lost some market share, initially with the decision to form a partnership with PGG Wrightson and then, when that collapsed, the shift to farmer trading of shares.
But that was now being reversed, with early-season year-on-year beef flows up 2% and lamb up 10% - the result, he said in an interview, of the company's stronger balance sheet.
"People understand the debate about our strategy and they are starting to support us and our leadership role and they have confidence in our balance sheet."
There had been misinformation about SFF's balance sheet. "We are slowly getting the message out there but, to be fair, it was hard to have a discussion when they were correct - we had high debt and a weak balance sheet."
Mr Cooper expected SFF to return to "normal" profit levels in the coming year, helped by gains from a project looking closely at its costs, continued growth of chilled meat exports, and higher market prices for lamb and grinding beef.
SFF had spent more than $250 million in capital projects in the past 10 years, including $23.6 million in the past financial year, and in the coming year costs associated with branding and promotion would be expensed, not capitalised.
Mr Cooper said shareholders understood SFF was restructuring, and while it had paid competitive prices for livestock, a lack of profitability meant it had not paid anything else. However, shareholders would receive a one-for-five bonus share issue this year.
Stock and debtors were lower at $214 compared to $234.5 million, and other current assets were almost half at $15.6 million ($27.8 million). Non-current assets were higher at $370.6 million ($293.1 million), due to the five-yearly revaluation of property and buildings, to give higher total assets of $600.2 million ($555.4 million).
Equity was $368 million ($310.1 million) and operating cash flow $65 million ($84.2 million).
