Blue Sky Meats, the Invercargill-based meat processor, posted a loss for the second year in a row and said the future of its unprofitable beef plant in Gore is under review.
The company reported a loss of $1.91 million, or 16.54 cents per share, in the 12 months ended March 31, from a loss of $1.96m, or 16.98 cents, a year earlier, according to its annual report. Revenue slid 17 per cent to $97.9m. It won't pay a dividend.
Blue Sky paid $3m for the Clover Meats beef processing plant in December 2014 after mulling the prospect of an investment in beef processing for some years in response to comments from sheep and bobby calf suppliers that they wouldn't supply more livestock unless the company widened the variety of species processed. However, the acquisition has failed to break even and has been a drag on the resources and performance of the company and Blue Sky closed the plant in the third quarter to stem the losses and review its options.
"We are now in the process of reviewing our options, which range from the reinstatement of full operations to an asset sale," said Todd Grave, who undertook a comprehensive strategic review of the company after he took over as chief executive in October last year.
Blue Sky noted several factors which impacted its profitability over the past year, including a $1.4m loss at its Gore plant, $163,000 of advisory costs related to a takeover bid by the local unit of China's Heilongjiang Binxi Cattle Industry Co, which didn't proceed after it failed to receive Overseas Investment Office approval within the specified time, and a loss of $860,000 due to delays in completing its new effluent pond which meant it had to stop its rendering operations for periods during the second half of its financial year. The pond is now complete and allows better management of effluent and 15 times more storage capacity, it said.
