Alliance Group has launched a review of the business after reporting a $97.9 million loss before tax for the 2022-23 year.
The result to September 30 represents a $214m turnaround from the previous year when it reported a record $116.3m profit.
Turnover also dropped, from $2.2 billion in 2021-22 to $2bn in 2022-23.
Shareholders were forewarned of the result during this year’s roadshows.
Chair Murray Taggart described the result as disappointing following the previous year’s record performance.
“The board and management have undertaken a comprehensive review of the business and we are taking steps to get the co-operative back on track to profitability.
“While it is early days, initial trading this financial year is tracking to expectations.”
The causes have also been thoroughly traversed: significant volatility as a result of geo-political tensions, labour constraints, inflationary pressures and weak global markets.
“Prices in our key global markets began falling steeply through the October-December 2022 period and remained weaker for the remainder of the financial year, compressing margins,” Taggart said.
Global prices for lamb fell almost 25% in just two weeks in October, the first quarter of the company’s financial year, from which it struggled to recover.
“As a result, the co-operative recorded a significant decline in inventory value between October and December 2022, driven by the challenging global markets.”
China, Alliance’s largest export market by value and volume, has yet to bounce back after the covid-19 pandemic, Taggart said.
“Globally, high interest rates and inflation eroded consumers’ discretionary spending.
“Fewer people dined in restaurants, and more people swapped higher priced red meat proteins such as lamb for less expensive white meats in their weekly grocery shop.
“There were also high levels of inventory across all proteins in various markets, particularly lower-cost Australian sheepmeat, which drove pricing down.”
Chief executive Willie Wiese said the co-operative is confident in its long-term strategy.
“We have made changes across the business in response to the tough trading environment.
“These conditions have highlighted significant opportunities for improvement.
“Solutions, ingredients and materials remain a key focus and we have identified opportunities to create greater market value in 2024 and beyond.”
In Focus: Meat markets are a mess, here’s why
Willie Wiese, Alliance chief executive, joins Bryan to discuss the turmoil in global markets that has seen the co-op go from a record profit last year to predicting a loss this season (listen from the 1:20 minute mark).