Alliance Group has recorded its best profit result in 12 years, shareholders were told at the company’s virtual annual meeting yesterday.
A profit distribution of $8.5m will be made to its farmer shareholders, in addition to $16.7m in loyalty payments already paid over the course of the year. The co-operative’s turnover was $1.8 billion.
Murray Taggart, chairman of Alliance Group, says Alliance’s improved performance is a favourable result after a challenging year, and reinforces the validity of the co-operative’s reinvestment strategy, with several years of sustained capital reinvestment reflected in the profit result.
He also acknowledges the way staff have effectively managed both the response to Covid-19 and ongoing global supply chain issues.
“Similar to many New Zealand businesses, we have experienced significant global supply chain disruption over the last 12 months. Our people worked with farmers, transport providers and shipping companies to make sure we were able to continue to move livestock off farms and utilise both our plant network and infrastructure to ensure this was almost invisible for farmers.
“We have ended the year in a strong position, but we know the next 12 months will continue to be volatile. We have therefore endeavoured to balance our desire to reward our farmer shareholders with the need for caution in the face of ongoing and unprecedented global logistics disruption.”
Alliance Group chief executive David Surveyor says he is particularly proud of the way staff responded to both the challenges and opportunities of the past 12 months.
“Whilst pleased with the improved profit result, we had global customers seeking product which we could not load and ship at the rate we would have liked. This has had a meaningful impact on our inventory and cash flow.
“One of the benefits of our balance sheet is that we have been able to use it in these times. It is our view that global logistics and supply chains will be challenged well into the foreseeable future, therefore we are improving systems and processes to speed our cash cycle.”
Overall, it has been a strong year for the co-operative, says Surveyor.
Alliance says it is starting to see investment in premium programmes deliver intended value to farmers. Support from farmers in the co-operative’s premium handpicked lamb and beef portfolio continue to strengthen as premiums paid for qualifying animals increase.
“We are seeing the benefits of our Manufacturing Excellence Programme, with the performance of plants improving year-on-year. This has created greater processing capacity for our farmers.
“This year, we increased our bovine network capacity by 10 per cent. We processed more cattle this year than the previous year. While this is good news for farmers and customers, we now need to leverage capacity and fully realise efficiencies if we are to achieve our ambitions.
“We continue to lead the industry in health and safety. We kept our people, partners and customers safe during all COVID-19 outbreaks.
“Our people deserve the credit for this year’s result. They have gone above and beyond to deliver for our farmers and customers around the world. They know how important it is that we meet our farmers’ expectations and are always looking for ways to lift performance and deliver results.”
The Annual Result also includes allowances for historical employee entitlements.