Silver Fern Farms Confirms Audited Result
December 24, 2014 - Silver Fern Farms has bounced back to profit and reduced debt for the 2014 year.
The co-operative is reporting a net profit before tax for the year of $1.8 million, a $38.3 million improvement on the
2013 season. Over the same period the company paid down $99 million in debt as part of a plan to reduce the cost of debt
servicing to the company.
Chairman Rob Hewett says Silver Fern Farms’ shareholders will be heartened to see audited confirmation of the turnaround
in profitability.
“This is a positive result, and confirms that the changes we’ve made to the business are setting us on the right track
after two challenging years. Whilst the absolute level of profit at $1.8 million is unacceptable, it is a sign post on
the path to where we need to get to.”
The reported result includes a provision taken of $3.3m, following the Employment Relations Authority decision announced
on 8 December regarding the technical redundancy of staff at our Silverstream plant in October 2013. Mr Hewett said:
“the decision was unexpected and we believe it is prudent at this stage to take the provision while we consider our next
steps over the coming month. Adjusting for this provision, we are in line with our profit guidance issued at the end of
October.”
Debt levels at year end are down $99m from $387.6m to $288.6m, a 25.5% reduction on the previous financial year. The
equity ratio has improved to 45.2%.
“We know many of our farmer shareholders see improved profitability and debt reduction as a priority for the company,
which is what we have delivered.”
“We are committed to creating a sustainable co-operative. To achieve that we need to materially lift our level of
profitability and we need to further reduce our debt. We have a range of plans in place right across the business to
achieve these goals. Whilst it is early into the new season, it is pleasing to note that, based on unaudited management
accounts, for the first two months of the new financial year we are trading ahead of last year and with lower levels of
inventory and debt.”
“As previously announced, we believe the timing is right to look at options to build an enduring capital base which will
help us return sustained profits to our shareholders.”
The company is currently working with Goldman Sachs to advise on options to create a more sustainable business and
capital structure.
“With an improved capital position there is the potential to invest in the business to further improve the efficiency of
our plant network, and to accelerate our value added programme which has shown great potential although still in its
infancy in international markets.”
Chief Executive Dean Hamilton says “the return to profit and debt reduction has come from a stable market for key
commodity products, a strong focus on plant performance and inventory management, a new regional procurement structure
and good progress for high value products locally and in new markets.”
“Looking forward, the new season has started positively. Cattle numbers are up significantly in both the North and the
South Islands, whilst lamb numbers experienced a slower start before flowing strongly in December. We are currently
processing in excess of 200,000 lamb and mutton and 20,000 cattle each week, meaning we have the most capacity on of any
company. Despite this there remains demand for space.”
“Whilst end-market prices across lamb, beef and venison have all been weakening off their highs seen earlier in the
season, they remain at good historical levels. The next key pricing period will be in the new year as New Zealand
processing levels seasonally pick up, customers reflect on their sell-through during the holiday period, and we gain
greater visibility on the Australian cattle kill which continues at record levels driven by drought conditions.”
The Annual report will be available in late January ahead of the company’s Annual Meeting which will be held in Dunedin
on February 18.
Summary of key financial items
FY2014FY2013FY2012FY2011Total income$2.32b$2.00b$2.03b$2.11bOperating earnings before interest, tax, depreciation and amortisation (EBITDA)$68.1m$22.0m$9.0m$87.7mOperating earnings before interest and tax (EBIT)$39.3m($8.5m)($16.2m)$60.9mNet profit before tax$1.8m($36.5m)($42.3m)$40.7mNet profit after tax$0.5m($28.6m)($31.0m)$30.9mTotal assets$760.8m$833.3m$828.5m$708.2mNet working capital$233.7m$288.6m$294.5m$213.6mNet debt$288.6m$387.6m$347.7m$153.2mTotal equity including members' shares$340.7m$320.2m$349.0m$394.8mOperating cash flow$91.5m($5.1m)($104.0m)$12.9mEquity ratio at balance date45.2%38.7%42.2%56.2%
About Silver Fern Farms
• Silver Fern Farms is a leading New Zealand processor and marketer of lamb, mutton, beef, venison and associated
products to more than 60 countries.
• The company’s vision: Inspirational Food Created by Passionate People.
• Silver Fern Farms is a farmer-controlled co-operative owned by more than 6,000 farmer shareholders.
• The company operates 21 processing facilities throughout the country, employing more than 7,000 staff in the
peak of season.
• Key markets in North America, the United Kingdom and Europe, Asia and the Middle East are supported through a
network of 8 international offices.
ENDS