Alliance Group announces $20m profit

Chair of Alliance Group, Murray Taggart said a drive to maximise operational efficiency and focus on capturing greater market value was behind the result .
Chair of Alliance Group, Murray Taggart said a drive to maximise operational efficiency and focus on capturing greater market value was behind the result . Photo credit: Supplied

Southland meat co-operative Alliance Group has announced a profit before tax and distribution of $20.7 million and a $9 million profit distribution to farmer shareholders.

Alliance is a co-operative owned by more than 4000 farmer shareholders and exports lamb, beef, venison and co-products to customers in more than 65 countries.

The co-operative recorded a turnover of $1.7 billion for the year ending 30 September 2019, and over the course of the year paid farmers a record amount for their livestock. 

Chair of Alliance Group, Murray Taggart said the increase in profit, up from $10 million on 2018, was pleasing and reflected the co-operative's drive to maximise operational efficiency and focus on capturing greater market value.

"Alliance Group has made good operational gains, sales and marketing has gathered momentum and we have continued our programme of building capability and investing in the co-operative for the long term," he said.

"Global market prices for most species were generally strong across the board. The outbreak of African Swine Fever and the subsequent culling of the Chinese pig herd led to an increase in demand for other proteins such as New Zealand beef."

There was also strong growth for Alliance Group in the global foodservice sector.

"As a 100 percent farmer-owned co-operative, we have been able to pass these gains directly back to our farmers. On top of that, we are pleased to be able to deliver a $9 million profit distribution and for the first time it will come with imputation credits for shareholders due to Alliance successfully advocating for a tax law change.

"The 50 percent investment during the year in the Meateor Pet Food business aligns with our strategy of capturing more value from every product we produce."

Alliance chief executive, David Surveyor.
Alliance chief executive, David Surveyor. Photo credit: Supplied

Chief executive, David Surveyor said the co-operative's performance demonstrated the company's transformation strategy remains on track.

"Our farmers tell us they value the progress we are making to build a stronger, more profitable and sustainable business that benefits their farm businesses and wider rural communities.

"Farmers made good use of our free of charge store stock facilitation service, which enables them to move lambs to other farmers for finishing," he said.

To support farmers' cashflow, the co-operative has recently been able to increase to $25/head the amount it pays in advance payments for lamb.

It also continued to invest in plant modernisation as part of its manufacturing excellence programme and this included upgrades at Dannevirke and Smithfield (Timaru) and a major investment in Southland with the official opening of a new venison plant in December 2018.

"We continued to lift our beef processing performance with our Levin, Mataura and Pukeuri plants processing record numbers of cattle during the 2018-19 season.

"In order to progress our strategy, we have selectively added cost and invested to grow the capability of our business in areas such as food service, branding and supply chain."

The distribution to shareholders will be made following Alliance Group's annual meeting on December 18, 2019. 

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