Alliance seeking outside capital
Reeling from two consecutive years of heavy losses, Alliance says it has appointed Craigs Investment Partners to explore external capital-raising options.
The co-operative has announced a loss after tax of $95.8 million for the year ending September 30, 2024. The previous year the co-operative lost $70m. In 2022 Alliance had posted as profit of $116m.
This year’s loss includes one-off post-tax costs of $48.2m in relation to business restructuring costs and other one-off adjustments, including the costs associated with plant rationalisation and redundancies following the closure of the company’s Smithfield plant in Timaru.
Alliance says this means its underlying financial result is a $47.6m loss after tax on a turnover of $1.8 billion.
“This is a disappointing financial result for Alliance and reflects the tough global trading conditions especially for lamb, which accounts for a high proportion of our portfolio,” says Mark Wynne, chair of Alliance Group.
“In response, Alliance launched a comprehensive reset designed to lift the performance of the company. We have worked hard to build the company’s financial resilience, significantly reduced costs, rationalised our processing capacity, improved our offering to farmers and invested in technology.
“The decisive steps we have taken means we have now turned a corner on a tough two years. We’re leaner, more agile and ready to ride the upturn in global red meat pricing. We have seen positive signs in the past few months and we are now forecasting a return to profitability in the current financial year.”
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The decline in shareholder equity in recent years and the ongoing global market uncertainty meant Alliance had to make the tough but necessary decision to strengthen its balance sheet with capital from farmer-shareholders.
Wynne says it understands the burden of asking our farmers to reinvest in difficult circumstances.
“And we pulled every available lever, including reducing inventory, accelerating global market payments, and cutting operational costs, to ease the pressure.”
