Meat processors beef up results

By LIAM DANN, primary industries editor

The meat industry has shaken off the soaring dollar and internal legal battles to post a round of strong annual results.

Listed Hawkes Bay processor Richmond yesterday reported a much improved performance with net profit of $12.9 million for the year to September 30, compared with a loss of $6.5 million last year. Total revenue was $1.22 billion.

Hours later southern meat processor PPCS - now effectively Richmond's parent company - released it own figures boosted by the inclusion of Richmond's results.

PPCS achieved a net profit of $16.44 million on total revenue of $1.37 billion for the year to August 31.

The co-operative - which holds a 63 per cent stake in Richmond - consolidated five months worth of the northern company's results into its own figures. Chief operating officer Keith Cooper said Richmond contributed about $2 million to the result.

PPCS was reasonably happy with its performance but would continue looking for efficiencies in the coming year, he said.

Final profits might not look impressive based on the size of turnover but it was important to recognise that as a co-operative PPCS' primary goal was increasing returns to farmers not producing profit, he said. PPCS suppliers receive the bulk of marketing returns on their stock at the point of sale.

Both Richmond and PPCS said their ongoing legal dispute had a minimal effect on the results.

After a lengthy series of court battles Richmond has now accepted a Court of Appeal decision resting control with PPCS. But a small group of shareholders will challenge the decision in the Privy Council, ensuring further uncertainty in the year ahead. Richmond declared $900,000 in non-recurring costs, much of them related to the litigation.

Chairman Sam Robinson said he was confident staff would not let that situation affect them. The latest result was proof staff had performed well in the past year despite the uncertainty of ownership, he said.

Richmond's improved result was driven by increased volumes and an improved operational performance, he said.

The season was marked by very high throughput during the first part of the year as northern farmers were forced by drought to reduce stock numbers.

Richmond paid a 7.5c full year dividend compared with 5c paid in 2002. It is budgeting for a net profit before tax of $13 million in 2004.

Robinson said supply was likely to be affected by lambing losses this spring and the procurement battle among the companies would be more competitive than ever.

On Thursday Invercargill-based meat processor Alliance announced a $37.6 million net profit for the year to September 30, up 34 per cent on the year before.

Chief executive Owen Poole said the result was boosted by an increase in the volume of chilled lamb and added value cuts exported. Of the three companies, Alliance processes the largest percentage of sheep meat which has commanded higher prices than beef and venison in the past year.