Alliance enjoys rise in profit

By PHILIPPA STEVENSON agricultural editor

South Island farmer co-operative meat processor Alliance Group has joined other big meat companies in showing increased profits from the favourable rural business environment.

The Invercargill-based company's after-tax profit for the year ended September 30 was $27.2 million, up from $19.2 million last year.

Turnover of $920.4 million was 11 per cent up on the $823 million of 1999.

Chairman John Turner said the company and farmers had enjoyed a positive financial year following good lambing in 1999, favourable climatic conditions throughout the season, improved export prices, and the depreciating dollar.

Distributions to shareholders will total $21.8 million, made up of pool surplus payments to shareholder suppliers of $19.5 million, and a fully imputed 5 per cent dividend, $2.3 million, to be paid on December 15.

Chief executive Owen Poole said Alliance had 12 months of unprecedented change, including reconfiguring its Mataura and Lorneville plants, introducing shifts, merging the workforces of Lorneville and Makarewa and consolidating beef at Mataura.

It closed sheep slaughter operations at Sockburn and built a new plant at Nelson.

After providing for non-recurring items of $10 million for the plant reconfiguration, and tax of $573,000, Alliance transferred $17.2 million to reserves.

The company also paid three-year term bonds of $17.5 million on maturity in June.

Total capital expenditure for the year was $21.6 million, the first time in a decade it has exceeded depreciation.

Mr Poole said increased revenue from better market demand, and lower exchange rates, coupled with higher average stock rates lifted producers' returns by 24 per cent for lamb, and 47 per cent for beef compared with 1999.

"The outlook for 2000-2001 remains positive."

Mr Poole said the value of the Kiwi dollar against trading partners would be a factor in the new season's returns to producers.