AFFCO Reports Drop in Profits

New Zealand - New Zealand meat procesing giant AFFCO has reported a difficult 2007 season.
calendar icon 4 December 2007
clock icon 2 minute read

The company, which is partly owneed by farmer and supplier shareholders said the year has been punctuated by significant foreign exchange volatility and difficulties around livestock pricing resulting in a disappointing outcome for the year.

Extraordinary items, both positive and negative, have impacted the business. As a result our net surplus for the year to 30 September 2007 is NZ$1.2million compared with NZ$13.1million in the previous year.

AFFCO’s operating revenues reached NZ$949.4 million, a two per cent reduction on the NZ$958.6 million achieved last year. This was the result of a higher New Zealand dollar for the majority of the year.

A significant event in AFFCO’s more than 100 year history has been the investment in Dairy Trust. As foreshadowed in the half year report AFFCO sold NZ$26million of land and other assets to Dairy Trust, and also subscribed NZ$15million cash for shares in that company.

Subsequently four parties purchased shares in Dairy Trust which has in turn made a successful takeover of 52.4 per cent of Open Country Cheese. AFFCO’s minority shareholding in Dairy Trust is currently 44 per cent of its total shareholding.

A revaluation of AFFCO’s substantial land holdings of over 730 hectares has resulted in a $39.8million gain in asset value. This is not included in the profit figure.

During the year AFFCO has made substantial operational improvements, building on the capital initiatives carried out over recent years and making the most of the synergistic benefits of working with majority shareholder, Talley Group Ltd. As a result the company says it is in a strong position having right-sized the business for the future with a network of processing assets that are well positioned and appointed.

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