Silver Fern Farms reports $21.8m loss amid low livestock flows in 2024

Silver Fern Farms' loss meant no dividend would be paid again this year. Photo / RNZ, Nate McKinnon

By Monique Steele of RNZ

Red meat company Silver Fern Farms Limited has recorded another loss of over $20 million, which it put down to low market pricing and “historically low” livestock flows in 2024.

The company said it bore the brunt of the costs in order to retain high farmgate returns.

The meat processor and marketer recorded a $21.8m loss after tax in the year to December, with revenue down 5% to $2.64 billion.

It followed a $24.4m loss in the 2023 financial year, but the year prior saw a record profit of $189.3m.

Financial results differed for the company versus the farmer-owned co-operative side of the business, which recorded a net loss of $10.9m after tax in 2024, a smidgeon off last year’s $10.7m loss.

Silver Fern Farms produced about 30% of all New Zealand lamb, beef and venison, with more than 16,000 farmer partners and 6000 staff at peak season.

A well-balanced mix of supply, demand and processing capacity marked a good start to 2024 for the processor, which has 14 sites nationwide.

But this was marred by a dramatic drop in livestock flows later in the year, such as volumes of beef down 8% year-on-year in the second half of 2024.

Chief executive Dan Boulton said it was a challenge to match capacity with low livestock flows, which was reflected in the results.

“We actually had really good livestock volumes in the first half of the year and great processing efficiencies through our plants,” Boulton said.

“But we knew the second half was going to be challenged in terms of livestock volumes, and that played out, and there was significant procurement tension as we had to compete for livestock.

“We started the year with some pretty depressed market pricing, which was not that helpful and that’s contributed to our revenue decline.”

Boulton said while the result was “clearly disappointing”, good prices for farmers have helped improve their confidence.

“We’re looking at record farmgate returns today and near-record market pricing.

“So pretty much all the market upside that we saw in the back half of the year was all being paid back to farmers – and that hurts our bottom line.”

Boulton said farmgate returns were up 25% to 30% on last year and above the five-year average.

But he expected the flow of livestock will return to more normalised levels in 2025.

“Last year, we wore the brunt of it, but I think we’re in a far more equitable position where we are today.

“We’re in a more sustainable distribution of where their market returns are sitting between farmers and processes.”

Boulton said that by having stronger commercial discipline across the business, there had been tens of millions of dollars in cost savings in the past year, but declined to say how many jobs were cut.

“We’ve had to make some careful decisions.

“We’ve had a laser focus on our cost base and operating efficiencies.

“We’re always having to optimise our network, depending on what the season throws at us, and last year was probably the extreme of that.”

Boulton said there was good demand in its markets of around 60 countries or regions.

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He said China was starting to rebound, the United States was going well – particularly for beef – and the European Union was going “from strength to strength”.

But the business was “closely monitoring” emerging geopolitical and trade risks, such as agricultural import tariffs into the US, which would significantly hurt red meat exports.

“There’s no doubt the global trading environment is in a heightened period of uncertainty,” Boulton said.

“There are a few waves ahead, but the company has a deep keel.

“We remain clear about our direction of travel and our role to support a prosperous and thriving sector.”

The loss meant no dividend would be paid again this year.

– RNZ