Alliance has made significant investment to the Lorneville plant in Southland.
Alliance has made significant investment to the Lorneville plant in Southland.
Despite posting an after-tax loss of more than $70 million in the last financial year, Alliance Group bosses remain confident about the future.
Alliance Group this week announced a “disappointing” loss which came hot on the heels of a record $73.6m after tax net profit in 2022. Its total revenue slipped from $2.2 billion to $2b for the same period.
A huge employer of more than 400 at its Levin meat processing plant, the co-operative is owned by almost 5000 farmer shareholders and exports lamb, beef, venison and co-products to more than 65 countries.
Murray Taggart, chairman of Alliance Group, said the past 12 months had been extremely difficult for the company and farmers.
“2023 is the 75th anniversary of the formation of Alliance, but it has not been a year to celebrate. This year’s loss is very disappointing, coming off last year’s record financial result,” he said.
“The board and management have undertaken a comprehensive review of the business and we are taking steps to get the co-operative back on track to profitability. While it is early days, initial trading this financial year is tracking to expectations.
“Like all New Zealand red meat processors, Alliance faced significant volatility as a result of geo-political tensions, labour constraints, inflationary pressures and weakening global markets.
“Prices in our key global markets began falling steeply through the October-December 2022 period and remained weaker for the remainder of the financial year, compressing margins. The global market price for lamb fell almost 25 per cent in just two weeks in October. As a result, the co-operative recorded a significant decline in inventory value between October and December 2022, driven by the challenging global markets.
“China, our largest export market by value and volume, has yet to bounce back after the Covid-19 pandemic. Globally, high interest rates and inflation eroded consumers’ discretionary spending. Fewer people dined in restaurants, and more people swapped higher priced red meat proteins such as lamb for less expensive white meats in their weekly grocery shop.
“There were also high levels of inventory across all proteins in various markets, particularly lower cost Australian sheepmeat, which drove pricing down.”
Chief executive of Alliance Group Willie Wiese said the co-operative was confident in its long-term strategy.
Chief executive of Alliance Group Willie Wiese.
“We have made changes across the business in response to the tough trading environment. These conditions have highlighted significant opportunities for improvement. Solutions, ingredients and materials remain a key focus and we have identified opportunities to create greater market value in 2024 and beyond,” he said.
Alliance Group continues to invest significantly in its plant network including the completion of a $16m warehouse automation project at the Lorneville plant in Southland and is introducing cutting-edge artificial intelligence technology to measure eating quality.
The Alliance Group meatworks in Southland. Photo / RNZ / Nathan McKinnon
“Our continued investment in our plants, people and processes has resulted in improved reliability, yield and product quality,” he said.
“Alliance Group has a comprehensive decarbonisation plan for its plant network. In 2019, we committed to phasing out coal usage at our plants within a decade. Projects currently under way will see the co-operative achieve a 21 per cent emissions reduction during the current financial year, and a 56 per cent reduction once implemented.
“While we’ve had a difficult year, we are confident Alliance has an exciting future for the next 75 years.”
The co-operative’s Annual Meeting will be held in Alexandra on December 15.
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