PPCS confident it will meet forecasts

Otago meat co-operative PPCS, which had negative cashflow of $143 million in its March half year, is on track to meet full-year forecasts.

The farmer co-operative said yesterday that the second-half performance was in line with revised year-end projections and would meet expectations of delivering a profitable outcome for the year to August 31.

PPCS reported a pre-tax trading loss of $26.7 million for the March half year from last year's $16.1 million trading profit. That was partly offset by the sale of property for a $19.4 million profit to bring the net trading loss to $7.3 million.

The half-year balance sheet showed debt, including bonds on issue, had blown out to more than $500 million and its equity-to-debt ratio dropped to just 25 per cent. It was in breach of banking covenants although its bankers, led by Westpac, had waived the covenant.

Accounting experts said the half-year accounts showed a worrying rise in inventory, possibly reflecting slow payments by customers and/or poor sales.

PPCS said in April a "more profitable" second half assumed a resumption of traditional stock flows, plant efficiencies, a positive contribution from North Island operations after restructuring and "correctly reflected market returns".

The company said yesterday that it was anticipating trading conditions to improve in the new season beginning on October 1 with international prices holding and the currency continuing to trade at recent or lower levels.

"These factors are expected to contribute positively to the PPCS group's ongoing profitable performance," the company said.

It said it had been assisted by currency movements, especially the fall of the dollar against the euro, sterling and US dollar.

The company said it had gained a consistent market share of lamb, mutton, beef and venison at improved margins from "realistic" livestock pricing through the key peak season processing months of February to May.

- NZPA