Silver Fern Farms lifts profit by 82%

Silver Fern Farms reported a net profit after tax of $189.3m, up dramatically from the year before.. Photo / Michael Cunningham

One of the country’s largest meat companies, Silver Fern Farms, has lifted its net profit after tax by 82 per cent.

The Dunedin-headquartered meat company released its full-year results to Dec 31 2022, reporting a net profit after tax of $189.3 million, up from $103.8m the year before.

Silver Fern Farms Co-operative, which jointly owns Silver Fern Farms with Chinese-owned Shanghai Maling Aquarius, also increased its after-tax profit to $94.1m, up from $51.5m in 2021.

Silver Fern Farms’s revenue was $3.27b, up from $2.75b last year, while earnings before interest, tax, depreciation and amortisation (Ebitda), including share-of-associate earnings, were up 67 per cent to $301.3m.

The meat company

Silver Fern Farms chief executive Simon Limmer said the year’s performance confirmed the company’s market-led strategy was the right one.

That had laid the foundation for the largest and most transformative investment programme in its 75-year history.

“Last year we entered one of New Zealand’s largest sustainability-linked working capital facilities, and we are committed to putting tools in the hands of our farmers by taking a leading role in establishing the government-industry joint venture into agricultural emissions reductions,” Limmer said.

Its investment in capital expenditure over the 12-month period had increased by $35.5m to $96m.

The company’s performance was allowing for its largest-ever investment programme, both across its 14 processing sites and a broad range of projects that would modernise core business systems and ways of working.

“We continue to invest heavily across all our sites, such as the $11.2 million investment in an automated lamb processing system at our Finegand site last year and significant spend at our Belfast site.

“We’re committing significant resource to the rebuild and integration of our core business processes and systems to optimise our decision-making and risk management.”

The company would be paying a 100 per cent imputed dividend for the year of $76.9m, up from $46.7m in FY21. That included $31.9m already paid in the interim dividend.

The co-op

Meanwhile, Silver Fern Farms co-operative chair Rob Hewett said the positive result reflected the business’ ongoing orientation towards the end consumer.

The co-operative had been focused on ensuring farmer suppliers share in the risk and reward of the operating company’s market performance.

“The first half of 2022 saw record returns for our farmer suppliers. The operating company’s ability to navigate risks in the market better than expected saw us proactively make over $21 million of reward payments to suppliers over and above the record schedule pricing and other payments they received,” Hewett said.

Total shareholder equity increased to $438.4m, up from $369m the year prior.

The co-op would pay a 100 per cent imputed dividend of 23.2c per share for the full year, which included 10.1c already paid in the interim.

The remaining 13.1c would be paid on 28 April.

The co-op, which is listed on the USX, last traded at $1.42 per share.

-By Riley Kennedy, BusinessDesk