Alliance chair Murray Taggart says the performance for the year under review was boosted by efficiency gains from capital expenditure.
Alliance has overcome a challenging year to report a $41.9 million profit before tax and shareholder-distribution for the year to September 30, an increase of 53% on a year earlier.
The $41.9m profit compares with $27.3m for the 2020 year.
After tax and distribution of $8.5m, the 2020-21 net profit is $23.8m ($6.9m).
Chair Murray Taggart says while international meat prices stayed high during the year, the biggest issue was sourcing sufficient containers to get product to market.
“We have not been able to get the containers we wanted,” Taggart said.
“Our inventory levels are lower than last year, but they could have been significantly lower if we had managed to get the containers we wanted.”
Inventory at balance date was $132m ($135m), but because ships have to sit off port for long periods, delivery to markets is delayed along with payment, forcing Alliance to carry that cost on its balance sheet.
Turnover was $1.8 billion, almost identical to the previous year, and Taggart says the performance for the year under review was boosted by efficiency gains from capital expenditure, what it calls its manufacturing excellence programme.
For example, investment in technology for primal and middle cuts and warehousing at Lorneville has made the plant much more efficient.
“There are a whole lot of little things that collectively have moved the cost curve down at that plant,” he said.
This year Alliance increased its bovine network capacity by 10% and processed more cattle than the previous year.
Taggart says the growth of its premium-product programmes was a highlight for the year.
Initially targeted at foodservice, when the covid pandemic forced restaurants to close, Taggart says supermarkets started looking differentiated products, with many stocking value-added cuts.
Looking ahead, Taggart says shipping congestion is likely to remain an issue until post-pandemic countries start returning to a normal lifestyle and buying patterns, at which stage demand from food service is also likely to pick up.
Chief executive David Surveyor says the co-operative has had the financial strength to cope with more than a year of disruption.
“One of the benefits of our balance sheet is that we have been able to use it in these times,” Surveyor said.
“It is our view that global logistics and supply chains will be challenged well into the foreseeable future, therefore we are improving systems and processes to speed our cash cycle.”
Taggart and Surveyor both paid tribute to staff in dealing with covid and the disrupted supply chain.
“Similar to many NZ businesses, we have experienced significant global supply chain disruption over the last 12 months,” says Taggart.
“Our people worked with farmers, transport providers and shipping companies to make sure we were able to continue to move livestock off farms and utilise both our plant network and infrastructure to ensure this was almost invisible for farmers.”
