Richmond worth outpaces PPCS bid

By LIAM DANN primary industries editor

The PPCS bid for listed meat processor Richmond looks dead in the water just a day after opening.

After a record profit announcement yesterday, Richmond shares soared past the $3.11 PPCS is offering for 100 per cent control. They closed at $3.20.

PPCS already has majority control, won in one of the country's longest and most bitter takeover battles.

PPCS now says it may reconsider the offer and stick with its majority 63 per cent stake.

Chief operating operator Keith Cooper said the company would wait for the independent appraiser's report - due next week - before reconsidering.

In a detailed forecast, released just 14 minutes after the offer opened, Richmond announced it will make a record pre-tax profit of about $39 million - almost $20 million up on last year.

Chief executive Richard Carver said he was delighted with the result given the terrible start to the year.

Richmond made an after-tax profit of just $433,000 for the half year due to the high kiwi dollar, lamb shortages and flooding.

Management had continued to restructure the business and remove costs, Carver said.

At the same time market conditions had dramatically improved and the dollar had fallen back, he said. In the past six months global beef prices have climbed to near record highs.

"Richmond has a big beef kill and we've been able to really maximise the opportunity," he said. "We're paying significantly more to the farmer than we were in April."

Carver declined to comment on either the share price or the PPCS bid.

"We just wanted to make sure we got the information out there under the continuous disclosure requirements so the shareholders are fully informed," he said.

One primary sector broker suggested the release might be part of a subtle bid by Richmond management to suggest it was worth more than PPCS was offering.

Although it was obviously going to be a strong result, highlighting pre-tax profits was "gilding the lily", he said.

Despite the spin in the release the outlook for Richmond and the meat sector as a whole now looked extremely good, said the broker - who asked not to be named.

Rival North Island meat company Affco also upgraded its profit outlook yesterday. In a short statement to the stock exchange the company said its third quarter trading had been better than expected. It now expects its 2004 full year profit to exceed 2003's result of $16.2 million.