Silver Fern Farms Co-operative has reported a big drop in profit, with the sheep meat sector under-performing.
The meat co-op has reported a profit after tax of $5.8 million for the 2018 financial year - a big drop on the 2017 result of $15.4 million.
Silver Fern Farms Limited chief executive Simon Limmer said while the 2018 after-tax result represented a back-to-back profit for the business, it was not at the level the company wants it to be.
"It is acknowledged we must lift the profitability of the business in order to sustain our aggressive capital re-investment programme, and to more actively progress our in-market investment in sales and marketing to grow value in the market," he said.
"Alongside the significant capital investment in Silver Fern Farms, the company continued to pay out strong farm gate pricing across all species."
In 2018, beef made a slight gain in procurement market share versus 2017, with sheep meat and venison remaining the same.
"Prices for beef and venison products held up throughout 2018 and returns to both farmers and processors equitably reflected the market realities," Limmer said.
"While sheep meats were a notable performer for the company in 2017, in 2018 returns could not sustain satisfactory levels of profitability."
He said this was due in large part to strong farmgate prices for sheep meats not adequately reflecting in-market returns at crucial points of the season when processing volumes were low and eroded our operational efficiency.
"December 2018 was the worst December result for the company in the last 10 years."
Post balance date, Silver Fern Farms Limited announced an un-imputed dividend of $1.7 million which will be equally distributed between the two shareholders, Silver Fern Farms co-operative and Shanghai Maling. This is in-line with the company's dividend policy of paying a minimum dividend of 30 percent of its net profit after tax.
The Co-operative Board has declared a distribution in the form of an unimputed patronage reward payable to those shareholders who have met the livestock supply criteria set out in the shareholder benefits programme.
The Annual Report will be available on April 12, ahead of the Co-operative's Annual Meeting which will be held in Dunedin on May 1.