Meat exporter turns loss into profit

Meat exporter ANZCO Foods has turned around its last-season loss to record a post-tax profit of $12.2 million for the year to September

The result comes from total revenue of nearly $1.3 billion.

It is an improvement on the $19.1m deficit during a difficult 2011-12 season for red-meat trading and the company says its books are in a healthy position.

ANZCO was begun by Sir Graeme Harrison, who is company chairman, and is owned by three shareholder groups led by Japanese company Itoham Foods

Harrison said ANZCO had taken the unusual step of announcing its audited financial results well in advance of the March-end company-reporting deadline to end what he said were rumours about its performance.

"We have been concerned about rumours in the New Zealand meat industry around the financial state of individual companies and comments to the effect that ANZCO has been actively promoting industry change because of our weakened position," he said.

"Nothing could be further from truth."

ANZCO's previous result was its first bottom-line loss from New Zealand operations, and came when the industry struggled with market volatility, falling lamb prices, farmers keeping stock to feed them to better weights and companies having to offer high prices to get stock through processing lines, he said.

However, it still generated a strong operating cash-flow surplus and this was improved during the 2012-13 year, Harrison said.

Positive cash flow from operating activities was $41m, up $5.8m on the previous year. The company's total revenue grew by $70m or 6 per cent.

Shareholder funds sat at 47 per cent of total assets - within the company's policy of 40 to 55 per cent. Total revenue was up from $1.21b.

Harrison said ANZCO recognised the ongoing decline in sheep and cattle numbers and had favoured finding an orderly solution to work out the removal of processing over-capacity.

ANZCO was among companies and co-operatives in talks this year to see if there was common ground for turning around some of the red meat industry's problems. The talks eventually faltered.

Managing director Mark Clarkson said solid progress had been made during the past year in advancing the company's business, adding more value to food products, ingredients, and health products.

"We have invested in a joint venture in a Melbourne-based pharmaceutical manufacturing company, Bovogen Biologicals Pty, purchased the former Hamilton-based Aria Farm and transferred this to our Waitara manufactured foods site, and expanded a jointly-owned Hawera-based ingredients company Taranaki Bio Extracts Ltd," Clarkson said.

"Since balance date we have also purchased Itoham's 50 per cent shareholding in New Zealand's only large-scale cattle feedlot operation, Five Star Beef. This business has become a fully owned ANZCO subsidiary."

The transfer of the ownership of Five Star Beef follows changes to ANZCO Prepared Foods and ANZCO Gourmet Foods, both previously 50-50 joint ventures with Itoham.

There has been no change in ANZCO's shareholders since 2001 and the company had paid regular dividends including this year.

Clarkson said ANZCO's solid financial position was amplified in the payment security offered to all lamb suppliers through CMP Farmer Nominees.

"No other meat company in New Zealand has a security in place with assets held in trust to protect livestock payments to farmers," he said.