Alliance Group announces Annual Results
19 November 2020
Alliance Group announces Annual Results
Alliance Group today announced an underlying profit of $27.4 million. Adjusted for one-off events, the annual profit result was $7.5 million before tax.
New Zealand’s only 100 per cent farmer-owned major red meat co-operative achieved a record turnover of $1.8 billion for the year ending 30 September 2020.
Murray Taggart, chair of Alliance Group, said it is a credible performance for the company, given the disruption and volatility in global markets as a result of COVID-19.
“The co-operative has faced challenges on many fronts. Like many businesses, we have been impacted by the pandemic, however our farmers also experienced extreme weather including drought, snow and flooding in parts of the country and difficult growing conditions. These on farm challenges also flowed through to the co-operative.
“Alliance Group displayed agility and diverted product to other markets and changed product forms for the different channels as the global pandemic gathered pace. We worked to ensure our supply chains were as robust as possible.”
David Surveyor, chief executive of Alliance Group, said the company’s response to the challenges was pleasing.
“We are proud of how our people across the business responded to the COVID-19 situation. Our people went above and beyond to deliver for our farmers, our customers and the country.
“The implementation of our business strategy, the approach to sales, the continuing level of investment in the company and the building of capability over the past five years has cemented our resilience to deal with change and disruption to our business and demonstrates the company has the right strategy in place.
“Although the season began with high protein prices for red meat, driven in part by African Swine Fever impacting the Chinese pig herd, there was a price correction as China took measures to curb protein inflation and this reduced farm gate lamb prices. This was further compounded by the spread of COVID-19 across the globe and the resulting lockdowns, which resulted in people movement restrictions and massive disruption to the food service sector.
“COVID-19 also impacted the co-operative’s processing operations with new operating protocols limiting capacity for farmers. We acknowledge and thank our farmers and livestock team for the support in managing through this period when farmers needed to have their livestock processed under restricted conditions.
“Importantly, Alliance Group’s market share for ovine, bovine and cervine has grown over the past year. Our beef performance is particularly satisfying. The co-operative has grown the cattle business by approximately 50 per cent over the last five years and this year Alliance processed more than 300,000 cattle.”
There was considerable interest from farmers in the co-operative’s new premium Handpicked Lamb offer, which was part of Alliance’s commitment to differentiating its products and rewarding shareholders, he said.
Alliance Group strengthened its investment in modernising its plant network as part of a Manufacturing Excellence Programme.
“We have completed projects to lift the capacity of our Smithfield and Dannevirke plants and a $5 million programme is underway to reconfigure the venison plant at Lorneville near Invercargill so it can also process cattle. Alliance is also investing $12.5 million in new processing technology at Lorneville and another $3.2 million to upgrade the plant’s Engine Room 2.”
Mr Surveyor said improving the health and safety performance at the co-operative remains paramount.
“We continue to make good progress in reducing the number of people getting hurt. We have invested $33 million over the past five years to look after our employees and ensure they go home safe and well to their families every day. While we have had substantial improvements in health and safety this year and injury rates are falling, there is more to do.”
Alliance Group has also been investing in its people with the launch of a new training programme for apprentices and trades staff.
The result excludes money the company may be eligible for under the Government Wage Subsidy Scheme, said Mr Surveyor.
“Alliance and the Ministry of Social Development are currently working in a principled and constructive manner to resolve the amount Alliance is entitled to retain. None of this amount will be recognised until discussions with the Ministry of Social Development are complete. The co-operative has already returned money that was not required for the purpose of retaining jobs and income.”
The annual result includes a $19.9m provision in relation to claimed historic partial non-compliance for employee entitlements, known as donning and doffing. A proposal to resolve these claims is subject to ratification by the New Zealand Meat Workers Union.
Mr Taggart said there would be no profit distribution to shareholders this year, reflecting the challenging operating environment.
“While we would have liked to have rewarded our farmers, we believe this is a responsible decision to ensure a profitable and sustainable co-operative for the future. We are committed to re-investing in the business to create a stronger co-operative.”
Alliance Group’s 2020 Annual Report can be viewed at: https://www.alliance.co.nz/about-us/annual-reports/
NOTES TO EDITOR
Alliance is a co-operative owned by more than 4,000 farmer shareholders and exports lamb, beef, venison and co-products to customers in more than 65 countries
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