Silver Fern closes specialist plants in Canterbury

Monday 14th June 2010

Silver Fern Farms, the South Island meat company that went public last year by putting its shares on the Unlisted platform, plans to close plants in Canterbury with the loss of up to 174 jobs as it strips out surplus capacity.

The Dunedin-based meat processor said it has begun consultation with workers at its Canterbury and Belfast plants and plans to make a final decision on the closures by June 25. The closures would affect its Canterbury lamb cutting plant its rendering and casings unit at Belfast, as well as a restructure of its coldstores at Belfast, the company said in a statement today.

“The red meat industry is suffering from the threat of alternative land uses, processing overcapacity, weak processor profitability and low farmer returns,” chief executive Keith Cooper said. Silver Fern “must and will continue to make difficult decisions to maintain industry competitiveness and give security to the business and our farmer-shareholders.”

Silver Fern posted a first-half loss of $9.2 million as sales dropped 22%, reflecting unfavourable currency movements. At the time of the announcement last month, the company said March and April had been positive with plants running at capacity, and that it was now in a “profit position.”

The company closed its Canterbury slaughter chains in 2008 in response to a dwindling national flock which has forced processors to chase a shrinking pool of available stock. Since then, sheep and lamb kill numbers in the South Island have dropped, Cooper said.

The proposed closure of the rendering and casings operation at Belfast comes after Silver Fern formed a joint venture company, Farmbrands, last year, which has since acquired a new rendering plant at Washdyke. The alternative of keeping the Belfast plant running would require more capital investment, Cooper said.

The company isn’t planning to halt its beef slaughter operation in Belfast, it said.

Shares of Silver Fern last traded at 65 cents on the Unlisted platform.

Prices for shares on Unlisted are here (Under the markets tab of Sharechat).

Businesswire.co.nz

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