Silver Fern Farms turns to FY loss on inventory writedowns

Tuesday 13th November 2012

Silver Fern Farms, New Zealand's biggest meat processor and marketer, posted a full-year loss after a drop in demand forced it to write down inventory valuations while it had to compete for livestock at "unsustainable" prices.

The net loss was $31.1 million in the year ended Sept. 30, from a profit of $30.8 million a year earlier, the Dunedin-based company said in a statement. Sales fell to $2.03 billion from $2.1 billion.

The company said the 2011/2012 season began with ideal pasture growing conditions which meant farmers tended to hold back livestock. As a result markets were short of product versus historical supply and global prices for lamb escalated "to unsustainable levels."

There followed a sharp fall in demand and value that was reflected back to suppliers and resulted in writedowns to inventory valuations in the year of about $25.6 million. Throughout, Silver Fern had to continue operating, including having to "compete for livestock at unsustainable prices."

The company's operating cash flow was a deficit of $105.6 million from a deficit of $7.5 million a year earlier.

Shares of Silver Fern trade on the Unlisted platform. They last changed hands at 83 cents, valuing the company at $83.3 million.

BusinessDesk.co.nz

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