SFF profit exceeds expectations
3rd Nov 08, 8:52am
SFFs is back in the black, the meat company reporting a $51.2 mill net profit for the last financial year, a $120mill turn-around in its accounts. Chair Eoin Garden attributed the result to higher livestock throughput with associated efficiencies and improving markets but warned profits would return to "realistic levels" this year. Mr Garden said SFF reduced debt by $91 mill, from $329.5 mill to $238.6 mill and attributed that to a tight rein on inventory, improved margins, disposal of non-core assets and the issue of supplier investment shares. It also implemented Project Rightsize at a cost of $25.3 mill, primarily in redundancy payments related to the closure or part closure of six operational sites and five lamb processing chains. Shareholder's equity rose from 35% to $40%. SFF paid $11.5 million in rebates based on animals supplied and a cash dividend of 10c for each fully paid supplier investment share held. CEO Cooper told the ODT he expected farmers to enjoy higher prices due to a more favourable exchange rate, but tighter margins should see SFF return to more normal profits. A large number of breeding ewes were killed last year, so fewer lambs would be processed this year. SFF and PGG Wrightson were in discussion to look at alternatives to their $220 million partnership, which stalled after the world financial meltdown prevented the rural servicing company meeting its first instalment. The transaction was unconditional and enforceable, and Mr Garden said the discussions would also deal with PGG Wrightson's default on the transaction.