Alliance Group doubles profit

By Aidan Fortune

- Last updated on GMT

Alliance Group, one of New Zealand's largest meat processors, said it could offer better prices to livestock farmers
Alliance Group, one of New Zealand's largest meat processors, said it could offer better prices to livestock farmers
New Zealand farmers’ co-operative Alliance Group has reported a doubling of operating profit last year.

Its operating profit rose to NZ$20.2 million (m), according to its results for the year to 30 September 2017.

Net profit before tax and distributions was NZ$28m, but that included revenue from a land sale in Southland.

The group’s revenue was NZ$1.53 billion, driven by firmer international pricing for beef, lamb, venison​ and co-products.

‘Exciting initiatives’

Murray Taggart, chair of Alliance Group, said: “The numbers tell a positive story. We are welcoming new shareholders, achieving a stronger balance sheet, improving our profitability and, most importantly, offering better livestock pricing for our farmers.

“Lamb prices are particularly strong and venison is increasingly recognised as a premium product,”​ he added.

“We also now have a balance sheet that allows us to undertake a number of exciting initiatives and introduce innovative practices. Alliance has a wide range of short-, medium- and long-term programmes underway as we seek to gain deeper market penetration and capture more value from existing markets.”

Alliance to ‘run faster’

The group paid out over NZ$15m in loyalty payments​ over the year.

David Surveyor, chief executive of Alliance Group, added: “We have improved our pricing structures in response to feedback from our farmers. This includes offering more minimum price contracts, which provides greater certainty for farmers and ensures they can have greater confidence when budgeting.”

Surveyor also detailed some of the group’s operational highlights over the 12 months. “This year, we have invested more than $10 million in robotic/primal cutting technology and reconfiguring the boning room at Dannevirke, completed a major upgrade of Lorneville and undertook a capital investment programme at Pukeuri.”

The group grew its product portfolio and reach with a range of activities in domestic and global markets as part of its efforts to lift sales and marketing. “We are focused on growing our markets and evolving to a more sophisticated player and capturing more value for our farmer shareholders,” ​said Surveyor. “That includes creating a differentiated portfolio of products and a suite of premium brands in which to house them.

“We have established a dedicated foodservice team in the UK to target high-end restaurants and hotels. We were also the first New Zealand company to dispatch chilled lamb to China as part of a six-month trial programme.”

Despite all the positive news, Surveyor said there was still a lot of hard work ahead for the co-operative. “Profitability is not at the level we want for a company of this size and we need to capture gains more quickly. Alliance Group needs to run faster.”

Related topics: Financial, New Zealand, Game, Beef, Lamb

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