Red meat exports slump, thanks to China
Weaker pricing and demand from China continue to impact New Zealand red meat export earnings.
He says the company faced a difficult global trading environment, however the strategy was paying dividends with an improved financial performance.
“The result was pleasing, but we are a long way from achieving a level of profitability that is appropriate for a company of this size. We’re still in the early stages of transforming the company’s performance and we’re confident we can capture more value from the business.
Alliance Group has a full pipeline of strategy projects that will continue the momentum, says Taggart. “As we progress our strategy, the emphasis will change from moving the company down the cost curve to capturing more value from the market. We already have a number of market initiatives underway that offer exciting opportunities to lift returns for our shareholders.”
The continuing decline in sheep numbers will place pressure on some companies’ balance sheets and profitability and over time force capacity rationalisation across the sector.
However, the changes we have made in the past year means Alliance Group is now well placed to thrive in this very competitive environment, he says.
Alliance chief executive David Surveyor says initial concerns over drought saw strong early stock flows for sheep, but these eased due to more favourable weather in the New Year as farmers targeted higher slaughter weights to offset weak international market prices.
The global sheepmeat markets remained challenging throughout the season with co-products particularly weak, he said. “Beef returns and kill volumes remained relatively strong, enabling sound profitability from processing operations.”
Venison prices were firm on the back of supply shortages in New Zealand, reduced game meat competition in Europe, and improved market diversification. Confidence has lifted across several sheepmeat markets in recent months and more positive signs of economic growth are appearing around the world.
These signs auger well for a medium-term recovery in farm gate prices but make it even more critical we extract as much value from our co-operative as possible. We will continue to invest in our plants and in the marketplace.
“There is a huge amount of work still to do before Alliance Group delivers the level of performance our farmers expect. We have almost 5,000 employees determined to get a great result for our farmer shareholders.”
Following Alliance Group’s announcement of a $9.8 million distribution to farmer shareholders last month, pool surplus payments will be deposited into bank accounts from today.
This distribution reflects the co-operative’s commitment to ensuring every cent it makes goes directly back to its farmer shareholders or is re-invested in the farmer-owned business.
The pool surplus distributions will be: Lamb $1.50/head; Sheep $1.00/head; Cattle, including prime, cow and bull, $10.00/head; Deer $5.00/head and calves $1.00/head.
The successful candidates to fill two vacancies on the board of Alliance Group are Don Morrison and Murray Taggart.
53.67% of eligible votes were exercised in the directors’ election (2015 – 50.18%; 2014 – 63.21%).
Ballot results:
- Murray Taggart 25,210,890
- Don Morrison 21,578,186
- Leon Black 19,316,289
