Richmond rides out volatility to post record half result

By PAULA OLIVER

Newly listed meat giant Richmond said yesterday that it was well on track to meeting earnings forecasts, after reporting a record half-year result in tough conditions.

Richmond, the country's largest meat exporter, reported a $13.3 million after-tax profit for the half year to March 31 - up 35 per cent on the same period last year.

The Hastings-based company listed on the stock exchange and completed a $50 million capital notes issue in February. It was then forecasting a post-tax annual profit of $19.4 million, and chairman Sam Robinson said yesterday that the company was looking good for meeting the mark.

Richmond's result came from an eventful six months, with the MAF vets' strike affecting production, and concerns over food safety escalating with Britain's foot and mouth disease outbreak.

Sales revenue grew to $696 million, up 21 per cent on the previous period. Mr Robinson said the result was achieved in challenging conditions, where stock flows were significantly different to the previous half.

"Despite the slower flow of livestock, increased cow retention compared to last year, and a high degree of marketplace volatility, Richmond has produced a strong result," he said. "There is every sign that the second half will be less challenging than the corresponding period last year."

Mr Robinson said it was likely that processing flows for the current year would be more evenly spread than last year, and consequently there would be a greater portion of stock in the second half of the year. He described the first half of last year as unusually "front-ended," with a level of profitability better than any previous full year.

Net profit was boosted $1.5 million by a one-off benefit related to Richmond's shareholding in the North America-based New Zealand Lamb Co, while tax was also reduced by the reversal of a $1.6 million legal expenses provision - in relation to disputed tax assessments - which has been settled in the company's favour.

Despite being particularly pleased with the result, Mr Robinson said he knew that variability between first- and second-half results was a fact of life, and that the company would be judged upon its full-year result rather than the first half.

He said the Richmond board was considering a number of initiatives that would lift operating performance. They would not influence the second-half result.

Since listing in February at $2.40, Richmond's shares have peaked as high as $2.51, and fallen back to $2.25. They have begun to settle in recent days, ending trading yesterday at $2.30.

In line with its forecast, Richmond will pay a dividend of 5c a share on June 1.