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Alliance Group Turns NZ$50 million Loss into Profit

08 November 2013

NEW ZEALAND – Beef and sheep processor the Alliance Group has turned a NZ$50 million loss last year into a NZ$5 million overall profit this year.

The company has reported a net profit before restructuring costs and tax of NZ$10.9 million from a turnover of NZ$1.4 billion for the year ending 30 September 2013.

After providing for restructuring costs of NZ$2.5 million and tax of NZ$2.8 million, the company recorded a net profit after tax of NZ$5.6 million.

The company’s balance sheet is also strengthening with an equity ratio of 61 per cent and an operating cash flow surplus of NZ$89 million.

In announcing the result, the Chairman of Alliance Group, Murray Taggart, said the return to profitability was a positive result, albeit at an unsatisfactory level, and follows a year with widespread drought conditions and lingering economic weakness in key export markets.

“We experienced a difficult first quarter with slow demand in our markets. However, the company recovered well as the year progressed.”

As the high carry-over of stocks from 2012 moved into consumption, prices started to improve especially for leg and shoulder products.

Over the past 12 months, the company has focused on further developing new and existing markets to balance those with slower demand.

Grant Cuff, Chief Executive of Alliance Group said growing demand in China played a key part in the recovery.

“After more than 20 years of development, China is now the company’s largest sheep meat export market by volume, receiving around 30 per cent of Alliance Group’s total meat products. The company also continues to invest in developing markets like Brazil and India.

“We are committed to growing our presence in the BRIC economies of Brazil, Russia, India and China, but also consolidating our position in our traditional markets in Europe, UK and North America.

“Prospects for the new season are positive with overseas buyers looking to secure product.”

The company will continue to develop procurement policies that reward 100 per cent committed supply through its Platinum and Gold supply agreements. In return, these suppliers will benefit from the extension of advance payments and yield quality contracts with premiums above the schedule price.

These initiatives are consistent with the company’s belief that farmers’ choosing to commit their stock to one company is a key factor in improving long-term returns.

The recent consolidation of processing through the closure of the Sockburn plant and transfer of sheep meat processing from Mataura to Lorneville has further reduced overhead costs, said Mr Cuff.

TheMeatSite News Desk

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