Affco on way to trebling profit

By LIAM DANN

The global beef boom will see meat exporter Affco almost treble its profit this year, the company predicts.

Affco, which celebrates its centenary this week, said a strong third quarter would drive its profit to more than $45 million for the full year. It will be the largest profit the company has ever made.

Last month, the company forecast it would exceed the $16.2 million it recorded in the year to September 30, 2003. It said nothing at the time about the scale of the improvement.

New Zealand's meat exporters have been reaping the benefits of an unparalleled global demand for beef this year.

Prices in the US have reached record highs, thanks in part to demand fuelled by the Atkins Diet. New Zealand companies have also benefited from Japanese and Korean bans on North American beef because of mad cow disease scares.

Continuing drought in Australia has further limited world supply.

Affco chief executive Tony Egan said the great results were being driven by the global conditions, combined with a bigger-than-expected beef kill in the third quarter.

Affco traditionally processes significantly more beef than lamb.

Egan said the company had also realised cost savings from the restructuring it went through last year.

Affco shrank its head office and moved to Hamilton last year after losing $12 million in the 2002 year.

Egan said the company had got itself into good shape to reap the benefits of the excellent trading conditions the sector was now seeing.

Fellow North Island meat company Richmond - just taken over by PPCS - upgraded its profit forecast last month.

It is predicting a profit of about $40 million - up from $20 million last year.

Affco shares jumped 11 per cent yesterday to close at 38c.