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Affco upbeat on profit jump

By Phil Boeyen, ShareChat Business News Editor

Friday 1st December 2000

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Meat processor and exporter Affco Holdings (NZSE: AFF) is hailing a strong full year profit result as a sure sign that the company has turned the corner and is heading for sustainable profits.

For the year to the end of September the company had an after-tax profit of $15.1 million, more than double last year's $6.5 million profit.

The result is Affco's second consecutive full-year profit following a $2.5 million operating loss and $70.3 million provision for restructuring in the 1997/98 financial year.

Chairman, Sam Lewis says the latest result shows the company is now heading for sustainable profits and continued growth through its Internationalisation programme focused on demand-led planning.

Operating revenues for the year were up by $156 million over last year at $993.3 million, and earnings before interest and tax were $23.2 million compared with $13.1 million in 1999.

Mr Lewis says although no dividend has been declared at this stage the board has agreed to review the position nearer to the annual general meeting in February when trading conditions for the first months of the new season are known.

During the year Affco opened a 30%-owned China joint venture as well a South American office in Buenos Aires and a Mathias office in London, bringing to 14 the number of offices it now has in key international markets.

Affco's chief executive, Ross Townshend, says the company is strongly positioned for growth with its Internationalisation strategy well on track, and is already leveraging its South American presence in a trial to supply organic Patagonian lamb into the UK market.

Affco says many Patagonian lambs meet organic certification due to low stocking rates on farms and climatic conditions that do not support parasites, conditions that are not easy to duplicate in New Zealand.

The trials are due to start next week and the company plans to supply into UK supermarkets in the New Year.

Affco is also looking for improved profitability from a new casings joint venture set up with a German firm, and from its LandMeat Ltd joint venture which combines three New Zealand meat processors and will create efficiency gains in processing throughput, planning and customer service.

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