AFFCO warns of fall in margins

Meat processor Affco Holdings says processing margins fell in its second half. In a statement to the sharemarket today, Affco chairman Sam Lewis said factors affecting profitability included reduced livestock numbers, the volatility and level of prevailing exchange rates and a tightening of market conditions offshore reports The ODT.  "All have combined to reduce processing margins in the second half," Mr Lewis said. In its half year report, Affco had expressed a cautious outlook for the second half, given forecast kill numbers and market conditions generally. "As the fourth quarter draws to a close this caution has proven well justified," Mr Lewis said. Affco posted a $15.3 million net profit for the six months to March 31, up 52.8 percent on the same period a year earlier, boosted by rising international prices for lamb. First half revenue lifted 18 percent to $588.3m. In today's announcement, Mr Lewis said Affco remained well capitalised with a strong balance sheet.  "Tougher operating conditions have been met with a stronger focus on core efficiencies, cost reductions and further development of key market relationships with core customers."