Alliance Navigates Global Supply Chain Issues To Post Favourable Result

20 Dec 2021

Alliance Group weathered the global supply chain storm to record its best profit result in 12 years, shareholders were told at the company’s virtual Annual Meeting today.

Last month, Alliance Group announced an operating profit of $41.9 million before tax and distributions for themyear ending 30 September 2021. A profit distribution of $8.5m is to be made to its farmer shareholders, in addition to $16.7m in loyalty payments already paid over the course of the year.

“Although the 2021 financial year was a reasonable year from a farming perspective, there was real upheaval beyond the farm gate due to the COVID-19 pandemic driving supply chain challenges,” said Murray Taggart, chairman of Alliance Group.

“Like many primary sector businesses, we were impacted by container shortages, off schedule vessels, delayed transit times and port productivity. Our sales strengthened as global markets reopened, but the logistics problems worsened, slowing cashflow, with increased debtors leading to an expanded balance sheet.”

Mr Taggart paid tribute to the efforts of Alliance’s people in delivering a great profit result and managing to shield farmer shareholders from the impact of the logistics disruption  “We are pleased to be distributing $8.5m to our farmer shareholders, but we are conscious of the need to balance rewarding those that have supported the co-operative with the desire to maintain a strong cash position in the face of a very uncertain trading outlook.”

The Government’s incentives for carbon farming remain a major threat to future livestock volumes, he said. “We support the rural sector shouldering its fair share of the burden to meet the country’s climate change targets, however we object to the rural sector being asked to subsidise other sectors’ reluctance to address their
carbon footprint.

We hope the Government is able to see through the political noise and correctly judge the rural sector on its warming impact on the planet, rather than the erroneous gross carbon equivalent measures.” David Surveyor, chief executive of Alliance Group, said the co-operative has made good progress at further
lowering the cost curves across its plant network.

“We have also committed to a range of significant projects that will further improve our cost competitiveness and reduce our carbon footprint across our manufacturing operations.” The company’s health and safety performance improved over the year with the recordable injury frequency rate
falling to 17 per million hours worked.

“While this is a major improvement from when we started this journey, we are committed to significant further reductions in the numbers and severity of injuries and will continue our significant investment in this area.” The outlook for the co-operative’s products is strong across the board, said Mr Surveyor.

“While COVID-19 continues to cast a shadow across the world, countries around the globe are returning to a semblance of normality and with it their people’s desire to enjoy grass-fed red meat with friends and family. “It is difficult to gauge the likely impact on our business and markets as the inevitable spread of COVID-19 occurs throughout New Zealand, but we are hopeful the measures we are taking within Alliance, combined with high vaccination rates, both across our own business and the wider supply chain, will enable us to continue to operate without major disruption.”

Directors Jason Miller and Jared Collie retired by rotation and offered themselves for re-election. As no further shareholder representative nominations were received, they were declared re-elected. Mark Wynne has joined Alliance Group as an Independent Director. He replaces Graeme Milne, who has retired from the Board.

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