Exporters see little to beef about

Meat exporters Affco and PPCS have overcome the costs of the high dollar to deliver improved performances for the first six months of the year.

Waikato-based Affco has surprised the market with a stronger-than-expected result but warns that the second half may be somewhat tougher.

At the other end of the country, Otago's PPCS says a delayed start to the season affected profits but more stock than usual will be processed in the second half of the year.

PPCS - a farmer owned co-operative - reported a profit of $17.46 million for the period.

That result includes a trading profit of $7.83 million and $11.84 million from the sale of its Islington processing plant.

NZX-listed Affco reported a profit of $14.4 million - up 29 per cent on the same period last year.

PPCS's result is difficult to compare with past performances because it includes one month of trading as an amalgamated company with Hawkes Bay-based Richmond.

Richmond was a listed company which PPCS acquired last year after a long-running and hostile takeover battle.

Like Affco's, PPCS's results in the North Island had been good, said the chief operating officer Keith Cooper.

An extra month of trading in the North Island have made the two results more comparable.

The Affco result is for the six months to March 31 while PPCS reports to the end of February.

Despite the difficulty of making comparisons, the period had been better than last year for both the northern and southern parts of the company, Cooper said.

The season in the North Island has so far been helped by good lambing percentages in the spring and better-than-expected cattle numbers.

But, in the South Island, the long summer has presented farmers with an extended feed season which has delayed the processing of stock.

"The South Island is always later but it has been even later this year," Cooper said.

"Unfortunately, our half-year at February can be significantly impacted by conditions because it is right smack in the middle of the season."

Affco chairman Sam Lewis believed Affco had "probably surprised on the upside" with its result.

He said it fitted an overall pattern of growth and improved performance at Affco since it was restructured in 2003.

But Lewis warned that the second part of the year was likely to be more difficult.

Cattle numbers were expected to be below last year's record numbers and the continued strength of the dollar was making it difficult to match last year'srevenue.

Global prices for beef and lamb have been strong for the past year, largely offsetting the currency costs faced by the exporters.

But there are fears those prices may fall before the dollar does.

The beef market in particular has been distorted by a Japanese and Korean ban on United States beef - because of a BSE scare.

That has allowed New Zealand exporters to sell more beef than usual in those lucrative markets.

PPCS and Affco said yesterday that the reopening of those markets to US beef was expected later this year and would have some negative impact.