Alliance profit halved after last year's extraordinary result

By NZPA

Friday 8th November 2002

Invercargill-based South Island meat processor Alliance Group halved its profit to $31.3 million for the year ended September.

The result was lower than last year's "extraordinary" $72.1 million profit because of the record prices paid to sheep and lamb suppliers, Alliance chairman John Turner said today.

"The fundamentals for sheep meat remain strong with international sheep meat stocks low.

"Although retail prices for lamb make it one of the most expensive meat proteins available, opportunities are good for those exporters who can provide customers with high quality, fresh product on an all-year-round basis," he said in a statement.

The company planned to spread seasonal kill, use assets better, sell more meat in fresh form, and reduce costs.

Significantly, Alliance also announced today it had bought its first North Island meat processing plant.

The company bought Dannevirke Meat Processors Ltd from receivers for $850,000, in order to secure year-round increased sheep and lamb meat supply.

The plant was in a good position to process livestock from the lower North Island.

"Although the asset is capable of immediate operation, it is suitable for extension and upgrading to a plant capable of processing up to one million lambs per year."

The plant would be extended to operate on a multi-shift basis.

Alliance had rejected other opportunities in the North Island because of the amount of capital required.

Annual operating cash flow was $9.8 million, with payments during the year of $30.3 million to employees and debtors.

The company spent $26.7 million on capital expenditure, and repaid $12.5 million in term bonds.

Alliance paid a further $20 million of capital bonds after the reporting period.

Alliance will issue three shares for every four stock units supplied during the 2002/03 season.

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