Alliance Group has fought off soaring livestock prices and logisitcal challenges to record a healthy profit.
Last month, Alliance announced an operating profit of $41.9 million before tax and distributions for the year 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 pandemic driving supply chain challenges,” says chairman Murray Taggart.
“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.”
Taggart paid tribute to the efforts of Alliance’s people to the efforts made by Alliance’s people to deliver the profit result and shield farmers 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 says.
“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, says the co-operative has made good progress at further lowering the cost curves across its plant network.
“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, says 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 representative nominations were received, they were declared re-elected.
Mark Wynne has joined Alliance Group as an independent director, replacing Graeme Milne who retired from the board.