Alliance Group doubles annual earnings as meat prices recover, targets fatter profitability

Friday 24th November 2017

Alliance Group, the world's biggest sheepmeat exporter, doubled annual earnings as its sales rose 15 percent with a recovery in global meat prices, but wants to lift profitability further.

Operating earnings rose to $20.2 million in the year ended Sept. 30 from $10.1 million a year earlier, the Invercargill-based company said in a statement. It paid $11.4 million to its 5,000 farmer shareholders, up from $9.8 million, while revenue rose to $1.53 billion from $1.36 billion.

"We are welcoming new shareholders, achieving a stronger balance sheet, improving our profitability and most importantly, offering better livestock pricing for our farmers," chair Murray Taggart said. "Alliance has a wide range of short, medium and long-term programmes underway as we seek to gain deeper market penetration and capture more value from existing markets."

Alliance's improved profitability comes in a year where sheep meat prices have climbed to records on growing appetite for the product in Chinese markets. At the same time, Alliance has targeted the wider Asian region, with the acquisition of sales and marketing business GoldKiwi Asia, and sold chilled lamb to China in a six-month trial which is seen as potentially opening up a major market for New Zealand.

The meat processor spent more than $10 million in the latest financial year introducing new robotic and cutting equipment and upgrading some of its sites as it seeks to make its operations run more efficiently and extract more value by tapping new products such as blood-based goods.

Chief executive David Surveyor said there are more gains to be made for the business to improve its margins and value for its farmer shareholders.

"Profitability is not at the level we want for a company of this size and we need to capture gains more quickly. Alliance Group needs to run faster," he said. "We are seeking to ensure the changes and progress we have made are sustainable through further investment, growing value-add, capturing market value and building organisational capability."

(BusinessDesk)

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