Alliance Group today announced an underlying profit of $27.4 million. Adjusted for one-off events, the annual profit result was $7.5 million before tax.
The farmer-owned red meat co-operative achieved a record turnover of $1.8 billion for the year ending September 30.
Murray Taggart, chair of Alliance Group, said in a statement it was a credible performance for the company, given the disruption and volatility in global markets as a result of Covid-19.
"Like many businesses, we have been impacted by the pandemic, however our farmers also experienced extreme weather including drought, snow and flooding in parts of the country and difficult growing conditions. These on farm challenges also flowed through to the co-operative.
To minimise the disruption brought by the global pandemic, Alliance Group diverted product to other markets and changed product forms for the different channels, Taggart said.
"We worked to ensure our supply chains were as robust as possible."
David Surveyor, chief executive of Alliance Group, said in a statement he was proud of the company's response to the challenge of Covid-19.
Although the season began with high protein prices for red meat, driven in part by African Swine Fever impacting the Chinese pig herd, there was a price correction, as China took measures to curb protein inflation and this reduced farm gate lamb prices, Surveyor said.
"This was further compounded by the spread of Covid-19 across the globe and the resulting lockdowns, which resulted in people movement restrictions and massive disruption to the food service sector."
Covid-19 also impacted the co-operative's processing operations, with new operating protocols limiting capacity for farmers, Surveyor said.
Alliance Group's market share for ovine, bovine and cervine had grown over the past year, Surveyor said.
"Our beef performance is particularly satisfying. The co-operative has grown the cattle business by approximately 50 per cent over the last five years and this year Alliance processed more than 300,000 cattle."
Alliance Group had also strengthened its investment in modernising its plant network as part of a Manufacturing Excellence Programme, Surveyor said.
"We have completed projects to lift the capacity of our Smithfield and Dannevirke plants and a $5 million programme is under way to reconfigure the venison plant at Lorneville near Invercargill so it can also process cattle. Alliance is also investing $12.5 million in new processing technology at Lorneville and another $3.2 million to upgrade the plant's Engine Room 2."
Surveyor said improving the health and safety performance at the co-operative remained paramount.
"We continue to make good progress in reducing the number of people getting hurt. We have invested $33 million over the past five years to look after our employees and ensure they go home safe and well to their families every day. While we have had substantial improvements in health and safety this year and injury rates are falling, there is more to do."
Alliance Group had also invested in its people, with the launch of a new training programme for apprentices and trades staff, Surveyor said.
The result excluded money the company may be eligible for under the Government Wage Subsidy Scheme, said Surveyor.
"Alliance and the Ministry of Social Development are currently working in a principled and constructive manner to resolve the amount Alliance is entitled to retain. None of this amount will be recognised until discussions with the Ministry of Social Development are complete. The co-operative has already returned money that was not required for the purpose of retaining jobs and income."
The annual result included a $19.9m provision in relation to claimed historic partial non-compliance for employee entitlements, known as donning and doffing.
A proposal to resolve these claims was subject to ratification by the New Zealand Meat Workers Union.
Taggart said there would be no profit distribution to shareholders this year, reflecting the challenging operating environment.
"While we would have liked to have rewarded our farmers, we believe this is a responsible decision to ensure a profitable and sustainable co-operative for the future. We are committed to re-investing in the business to create a stronger co-operative."