Affco shareholders given warning of poor result

By DITA DE BONI

A particularly turbulent six months for meat company Affco will be underscored by a lower than expected half-year result.

Yesterday, Affco warned its interim result, to be disclosed on May 18, has been downgraded as a result of a "number of factors which had an adverse impact in the six months," and will come in substantially below last year's $7.4 million half year profit.

The company says those factors include the US beef quota issue in November, a wet summer producing lower-than-expected stock numbers, and this year's MAF vets' strike.

The beef quota issue cost the company $500,000, while the vets' strike shaved $3.5 million off the bottom line, the company says.

But while those issues have caused the company quantifiable hits to profit, recent management woes have signalled more fundamental problems, starting with the resignation of chief executive Ross Townshend five days after its annual meeting in February.

Four senior managers, including the marketing, operations and finance managers, followed Mr Townshend out the door soon after.

In the wake of the mass exodus of senior staff, executive chairman Sam Lewis said that the run-down condition of some of Affco's plants, and the culture of extravagance that existed in the company, needed to be addressed.

The company has said cuts are coming to staff and salaries.

But the news that costs will be reined in have not reversed a decline in its share price. This was unchanged at 33c yesterday, down from 42c in February.

Chief financial officer Andrew Titter said the internal review of costs, structures and activities would "impact positively in the second half to bring the company closer to best practice in the meat industry," but that the company was revising current year revenue assumptions "as livestock numbers prove lower than anticipated by industry economic forecasts."