Weekend Money: Alliance profit drops 7 per cent

By LIBBY MIDDLEBROOK

The Asian crisis and drought have singed the profits of one of New Zealand's largest meat processors.

Alliance Group had pre-tax operating profits of $31 million to the year ended September 30, down seven per cent on last year's $33.4 million profit.

Chief executive Owen Poole said the fall in profits was mainly due to an oversupply of light-weight lambs and a shortage of quality stock. The downturn in the Asian economy also had an adverse impact on the South Island cooperative, which is one of the largest sheep and lamb processors in New Zealand.

"Some parts of the South Island experienced their second season of drought and the impact was we had a significant number of lighter weight animals for processing and an over supply which affected price," he said.

While Alliance experienced a seven per cent downturn in operating pre-tax profits for the 1998/1999 year, its competitors were worse off.

North Island-based Richmond's pre-tax operating profits fell 53 per cent to $5.9 million on the previous year and PPCS's pre-tax operating profits fell 49 per cent to $14.6 million.

Meanwhile, Alliance's sales revenue rose 11 per cent to $762 million from $853 million in the previous year. Interest expenses reduced the company's profit to $9.4 million, down 42 per cent compared to last year's $16.4 million profit.