Silver Fern Farms, the meat processor in which a controlling stake was sold to China's Shanghai Maling for $267 million at the end of last year, has plunged to a $30.6 million loss as earnings collapsed in what it has described as a "very challenging year across the industry".
A year earlier it had posted a net profit of $24.9m. The $30.6m loss includes a $22.4m impairment charge related to the Shangai Maling investment.
Earnings before interest, taxation, depreciation and amortisation dropped to $32.1m in the year ended September 30, 2016, from $90.5m a year earlier.
"While the result was in line with previous guidance of a small operating loss, it was nonetheless particularly disappointing and reflected a very challenging year across the industry," chairman Rob Hewett said.
"The company managed its way through a tough year as a perfect storm hit with sharp falls in a number of end-markets in the first half, lower industry-wide volumes, unseasonal livestock flows which limited capacity utilisation, and a strengthening NZ currency through the year amplified in June by the Brexit event."
Silver Fern Farms is New Zealand's largest meat company and political opposition to the Shanghai Maling sale, which was completed in December 2016, was led by the New Zealand First Party.
The deal enabled Silver Fern to repay its debt, removing a threat from its banking syndicate to withdraw support. The company has cut its net debt to $107m from $121m a year earlier, and halved its finance costs to $14.8m, chief executive Dean Hamilton said today.
"Looking ahead, whilst mild weather and strong grass conditions have delayed the start to the new season, we are confident that if a more settled operating environment prevails combined with the improvements we have undertaken and have planned, we will see the performance of Silver Fern Farms improve significantly in 2017," Hamilton said.
The redemption of approximately $5m in remaining supplier investment shares and the payment of a $35m special dividend are due to be completed by the end of February.
Silver Fern's annual report will be available ahead of its annual meeting, to be held in Dunedin in February.