KEY POINTS:
Better returns and less debt at meat processor PPCS have helped turn a half-year loss into a profit.
Revenue for the six months ending February was $884.9 million, up from $871.5 million the previous year. Net profit was $11.2 million, compared to a loss of $14.6 million last year.
A proposed industry-wide meat merger failed last week after PPCS and processor Alliance failed to come to an agreement on how the new entity would work.
Regarding its half-year result, PPCS chief executive Keith Cooper said markets had improved and the company had been more efficient. The seasonal profile of the meat industry had typically seen negative results in the first half.
PPCS's performance demonstrated the impact from a commitment to reducing debt - down by $63 million on the previous year, Cooper said.
It was encouraging to see farmer payments maintained during peak season for cattle in the face of an appreciating currency, plus an improvement in lamb prices over last year, he said.
"This reflects cost containment measures related to plant operating costs and overheads, which have also proved effective in spite of inflationary pressures during the period."
The six month average exchange rate for the year increased 13 per cent against the US dollar, eight per cent against the British pound and 0.5 per cent against the euro.
Lamb, beef and venison volumes were similar to the previous year, while mutton had increased. There were positive signals for the remainder of the financial year, Cooper said. "In general terms we expect a continuation of this trend."
The high exchange rate would continue to impact farm gate returns, although there was evidence of positive future international pricing, particularly for lamb.
The company would continue to focus on debt reduction, improving operational performance and marketing initiatives, Cooper said. "You're going to see a total repositioning of the business which affects plants, how we go about our business and how we go about marketing our products."
Chairman Eoin Garden said the result was encouraging, although returns to shareholders continued to be unacceptable, which with the weather during the last season had put many suppliers under pressure.
