Leaner Affco rebounds after slow start

By LIAM DANN

After a poor first quarter, meat exporter Affco has bounced back to make a profit of $11.2 million for the six months to March 31 - up 4 per cent on the same period the year before.

Revenue for the period was $405.9 million, down from $447 million.

In December the company warned that tougher trading conditions were likely to cause half-year profits to fall.

At that time North Island meat processors were struggling as poor spring conditions and low lamb numbers combined with increased killing capacity to squeeze their margins.

The difficult first quarter was made worse by the appreciating exchange rate, which put pressure on export revenue.

Since then, favourable weather has generated good lamb growth and greatly improved the volume of animals ready for processing.

Exchange rate pressure has also started to ease.

Affco chairman Sam Lewis said the company had been through a major restructuring over the past two seasons, making it more focused, cost efficient, and profitable.

"Initiatives in the key areas of procurement, processing, and marketing are now bearing fruit."

While it was not a major improvement, it was pretty good given the conditions, he said.

The result includes a $2.6 million writedown for intangible assets.

Affco's net assets to the end of March have increased to $172.5 million compared with $157.1 million at March 2003.

The company will not pay a dividend.