Richmond dips into the red

By KEVIN TAYLOR

Listed meat company Richmond has blamed lower stock volumes, big falls in some markets and the poor performance of some smaller businesses for its $6.5 million after-tax loss.

The Hastings-based company yesterday released its September year result, which reported a big turnaround from a $20.7 million profit the previous year.

Revenue fell 8 per cent from $1.43 billion to $1.31 billion as a result of the decline in throughput and a rising New Zealand dollar.

Chairman Sam Robinson said by any standards the performance was disappointing, but the board was confident of the company's ability to rapidly return to profit and was budgeting to do so next year.

A long-running court battle between Richmond and South Island competitor PPCS had distracted board and senior management, Robinson said.

The case also hit Richmond's bottom line, with the company revealing that $1.3 million of $3.6 million in one-off costs for the year arose from the case.

Justice Young this week reserved his decision on what orders he might make as a result of his August ruling that PPCS had breached the Securities Amendment Act - and Richmond's constitution - by setting up other parties to buy Richmond shares with PPCS' financial backing, while keeping the arrangements quiet.

A decision is expected in two to three weeks.

Robinson said the decision would give the board and management certainty. Some costs arising from the case would spill into next year.

Richmond reported a $1.5 million loss for the six months to May.

Robinson said no single factor was responsible for the full-year result, and the company had been too optimistic in its comments at the half-year result.

Venison, although representing less than 3 per cent of sales volumes, had a "significant negative impact" on the performance.

The company had held inventories that were not realisable in the market after prices in Germany, the main market, collapsed in the first half of the year.

Richmond Leathers was one area that felt the immediate effect of a decline in demand for luxury goods after the September 11, 2001, terrorist attacks in the United States. Prices for finished hides fell sharply as a result.

Robinson said that despite the performance the board was pleased with operating cash flows, with a net operating cashflow of $62.1 million compared to a negative $29.1 million in the previous year.



PPCS this week reported an end-of-year profit of $8.4 million, down 77 per cent because of low stock numbers and a firming exchange rate. Its operating revenue fell from $1.165 billion to $1.093 billion.