Red meat farmers are being warned to brace themselves for a dip in market returns.
The company recorded its best ever revenue of $1.7b and a net profit before tax of $30.6m for the year ended 31 December 2019. This is the company’s third highest profit ever and a vast improvement on the pre-tax loss of $39.1m in 2018.
Anzco’s 2019 result compares with Silver Fern Farms pre-tax profit of $89.6m on sales of $2.6b and Alliance’s profit of $20.6m on $1.7b turnover for the same year.
“In 2019, we made record payments to farmers for the second year in a row ensuring the benefits of higher market prices have been shared across the value chain,” says chief executive Peter Conley.
“We regularly measure payments to farmers for sheep and beef, and we have consistently paid premium prices when benchmarked with the wider industry.” Conley claims market diversification was an important strategy for the company in 2019, with the business focusing on expanding its beef, lamb and healthcare products in a range of markets including New Zealand, Japan, the UK, Europe, North America, and China.
“As the year progressed, global demand for New Zealand beef and lamb products continued to improve which provided a sustained period of higher market returns.
“Despite the risks of volatility and the emergence of trade-related conflicts in global markets, red meat pricing increased steadily during the year, with China standing out as a significant market for both beef and lamb products.”
Conley added that the company continued to offer a diversified portfolio of meat, value-add and healthcare products, with Japan, the UK, Europe and North America all remaining integral to balancing market options.
The company says its $11m investment in automation in 2018 at its Rangitikei lamb processing operation had delivered significant gains in 2019.
Meanwhile, Conley concedes that this year has been tougher from the start with Lunar New Year hitting sales in January closely followed by the Covid-19 pandemic.
Conley attributes much of the improvement in 2019 to the adoption of the sales and operations planning system, which matches customer orders and product specifications to inform livestock procurement and production planning, thus reducing inventory levels and wastage.
He says the system provides much better market signals, taking advantage of Anzco’s in-market resources and close customer relationships in key markets including Japan, China, Germany, Britain and the United States.
Last year also saw significant growth in Anzco’s added-value business, which already represented 10% of turnover in the previous trading period.
The Primary Growth Partnership FoodPlus initiative, completed during the year, produced two successful developments, notably the Bovogen blood product business and healthcare products. Other profitable added-value units are the beef jerky plant and the beef patty production plant. However, both had been severely disrupted by food service restrictions during the Covid-19 lockdown.
Anzco is majority owned by Japanese giant, Itoham Yonekyu Holdings (IYH), the ninth largest meat company in the world.