Strong result for Silver Fern Farms

Photo / John Stone.

Dunedin's Silver Fern Farms, which has formed a joint venture with China's Shanghai Maling, said it its earnings continued to turn around in the year to September.

The co-operative, New Zealand's biggest meat processor, said its earnings before interest, tax, depreciation and amortisation came to $86.9m, up 28 per cent on the $68.1m achieved in 2014.

Silver Fern's net profit before tax for the year was $27.2m, up from $1.8m in 2014.

"This is a positive result, delivered in an environment where there were a number of constraints," chairman Rob Hewett said. All species made a significant contribution to the improvement.

"However, while a significant improvement on 2014, we still have progress to make to achieve a return that reflects the amount of capital we have invested in the business over the course of a season," Hewett said. Hewett said a key aim for 2015 was to put the company on a sustainable financial footing.

"To achieve that we needed to both reduce debt under our own steam, and to introduce new equity," he said.

Silver Fern reduced its net debt from $289m at the end of the 2014 financial year to $121m at the end of 2015, through its own initiatives - being profitable, reducing inventory, selling non-core assets, and winding down the investment in its dairy bull beef scheme.

The company's shareholders, at a special meeting on October 16, voted in support of the investment by Shanghai Maling, which involves the Chinese company injecting $261m into Silver Fern.

Hewett said the combination of an improved profit performance and the new investment from China would put Silver Fern Farms in a position of financial stability and strength.

Chief executive Dean Hamilton said beef and venison both had good results, and the company's focus on turning around the performance of its sheep meat business was starting to achieve results.

He said there was scope for continued improvement across all three species.

"Disciplines around managing our inventory, committed livestock purchases and product sales meant that we did not carry excessive risk in achieving the result," he said. Silver Fern's year-end inventory of $73m was the lowest level for at least the last seven years.