Alliance alone in posting profit

By Philippa Stevenson

The South Island meat company, Alliance Group, has weathered a difficult six months better than its northern rivals and declared an after tax half year profit of $9.1 million.

The two big North Island companies, Richmond and Affco, both reported losses in the half year to March.

Alliance said drought, strong competition from pork and poultry, financial difficulties in Asia and Russia which impacted on the market for co-products such as wool and pelts, and declining lamb prices all combined to affect its result which was $2.8 million less than the same period last year.

Its objective of lifting shareholders' payments year-on-year would not be achievable, the farmer co-operative said.

Drought across much of the South Island caused heavy demand for processing space as farmers reduced numbers to match available feed.

"As a consequence the processing season was highly compressed, adding to costs. Average weights were lower with the significant volumes of lightweight lambs available suitable only for the commodity trade," the company said.

Alliance chief financial officer, Grant Cuff, said the company's better performance against its northern counterparts could be attributed to "processing efficiently and selling efficiently."

"That's it. We haven't done anything unusual or different to any other year."

The company recently said it would introduce shift work in lamb and beef processing at its Mataura plant, in eastern Southland, and work is underway to adapt the plant ready for a start up in the new season in October.

Cutting and boning rooms at different plants had been on shifts for a number of years but Mataura would be the first large plant to adopt the practise universally, Mr Cuff said.

He said three slaughter chains operating for eight hours a day, five and half days a week would be reduced to one chain operating around the clock with two longer shifts six days a week. Plant capacity would remain steady.

Beef processing was also being centralised at Mataura, and job numbers were likely to rise on the site, Mr Cuff said.

Richmond and Affco both hoped to achieve profitability in the following six months but Mr Cuff said the second half of the year was not necessarily a better one in the South Island where the season was earlier.

However, the company did expect to remain profitable at year's end, he said.