KEY POINTS:
Meat exporter PPCS has managed to reduce its first half loss from a year earlier.
In the six months to the end of February the Dunedin-based farmer-owned co-operative reported a net loss before interest, tax and non-recurring items of $8 million.
That was a 42 per cent improvement on a $13.7 million loss for the same period a year earlier.
The most recent result was achieved on revenue of $958 million, up from $853 million.
The first six months of each financial year are traditionally the period of lowest profitability in the meat industry.
PPCS said the result reflected that seasonality, accentuated by unsustainable early season livestock prices and the continued appreciation of the New Zealand dollar.
Chief executive Keith Cooper said the company was performing well in the second half of the year, but the ongoing strength of the NZ dollar remained a concern.
Strong currency conditions undermined returns, as New Zealand exported meat into a global protein environment where prices remained under pressure, he said.
Underlying performance had improved in the first half, particularly in plant operating expenses and overheads.
Operating cash flows during the period were stronger than the equivalent period a year ago, due to stronger cash receipts partially offset by higher payments to suppliers and employees, Mr Cooper said.
As a result of the stronger operating cash flows, total borrowings had reduced by $41m compared to a year earlier.
PPCS was introducing a new procurement plan after a highly competitive environment saw prices for livestock reach unsustainable levels early in the season, he said.
The new procurement plan aimed to address such seasonal variance in lamb pricing and better relate livestock pricing to market returns.
While beef and venison had continued to perform solidly, lamb had experienced a difficult period. Consumers continued to resist strong 2004/05 prices in the face of competition from alternative meat proteins, specially poultry and pork, and alternative lamb supply, particularly from Australia.
PPCS is responsible for 32 per cent of New Zealand's sheep meat exports, 31 per cent of beef exports and 58 per cent of venison exports. It owns 24 processing plants, and employs about 9000 staff at the peak of the processing season.
- NZPA
