Alliance Group reports modest profit on revenues rising above $2 bln. But as Allan Barber points out, it would've been hard to lose money in the current environment

The board and management of Alliance must be celebrating the end of a gruelling 12 months, culminating in the announcement of a $24.6 million pre-tax profit, at the upper end of the cooperative’s predictions. This has resulted in Dawn Meat’s agreeing to pay $276 million for its 65% share, about 10% up on the original amount of $250 million.

Immediately on conclusion of the investment in early December $200 million of the total will be applied to debt reduction, reported at $210 million in the final accounts, with the balance being held for capital expenditure and shareholder rewards over three years.

The banks will clearly be willing to extend seasonal finance facilities to the newly solvent company, although they will doubtless pay close attention to ensure these are limited to the pattern of livestock supply and debt recovery. The objective must be to avoid allowing an increase in core debt.

The 2025 annual report shows a 16% lift in revenue as a result of the substantial lift in market pricing, producing an operating profit of $41.3 million compared to a $42.8 million loss last year. The increase in revenue equated to $285 million, but the cost of sales increase was restricted to $207 million, an improvement of $78 million, and operating expenses were $6.8 million lower than 2024.

In the media release announcing the result, CEO Willie Wiese highlighted the return to the basics of the core business, focusing on enterprise efficiency, market value creation and organisational discipline. He referred to the improvements in plant performance and processing reliability, as well as strengthened control and enhanced decision making through the long-awaited roll-out of the enterprise resource planning system.

He also referred to the improvements in the marketplace, both in market diversity and the way the company sold its products, although China had remained quieter than before. That said, 2025 has seen an entirely different trading environment, in which pricing has hit historic highs, and it would have been very hard to lose money.

2024, particularly for Alliance, had posed a series of challenges. Supply and demand had been much more difficult to control, while the closure of Smithfield marked a low point for the cooperative. This brought matters to a head with the banks demanding a debt repayment programme with a deadline of the end of this year.

Much hard work remains to perform to meet the standards of the new majority owner, Dawn Meats. Continuing the path towards true industry competitiveness while at the same time retaining supplier loyalty will be a challenge.

But Alliance has made a good start and deserves congratulating for getting to this point.