Alliance Group today announced an underlying profit of $27.4 million. Adjusted for one-off events, the annual profit result was $7.5 million before tax. 

New Zealand’s only 100 per cent farmer-owned major red meat co-operative owns seven plants around New Zealand, including at Mataura and Lorneville.

The group achieved a record turnover of $1.8 billion for the year ending 30 September 2020. 

Advertisement

Advertise on the Southland App

Alliance Group chairman Murray Taggart said it was a credible performance for the company, given the disruption and volatility in global markets as a result of COVID-19.

“The co-operative has faced challenges on many fronts. Like many businesses, we have been impacted by the pandemic, however our farmers also experienced extreme weather including drought, snow and flooding in parts of the country and difficult growing conditions. These on farm challenges also flowed through to the co-operative. 

“Alliance Group displayed agility and diverted product to other markets and changed product forms for the different channels as the global pandemic gathered pace. We worked to ensure our supply chains were as robust as possible.”  

Mr Taggart said there would be no profit distribution to shareholders this year, reflecting the challenging operating environment. 

“While we would have liked to have rewarded our farmers, we believe this is a responsible decision to ensure a profitable and sustainable co-operative for the future. We are committed to re-investing in the business to create a stronger co-operative.” 

Alliance Group chief executive David Surveyor said the company’s response to the challenges was pleasing and he was proud of how the business responded to Covid-19.

“The implementation of our business strategy, the approach to sales, the continuing level of investment in the company and the building of capability over the past five years has cemented our resilience to deal with change and disruption to our business and demonstrates the company has the right strategy in place," Mr Surveyor said. 

Challenges included beginning the season with high protein prices for red meat, driven in part by African Swine Fever impacting the Chinese pig herd, followed by price corrections which reduced farm gate lamb prices.

Covid-19 then spread across the globe, with lockdowns restricting movement and disrupting the food service sector. 

 David Surveyor, chief executive of Alliance Group. PHOTO: Supplied

Mr Surveyor said Covid-19 also impacted on processing operations. New operating protocols limited capacity for farmers. The business acknowledged and thanked farmers and livestock teams for support while livestock was processed under restricted conditions, he said. 

“Importantly, Alliance Group’s market share for ovine, bovine and cervine has grown over the past year. Our beef performance is particularly satisfying. The co-operative has grown the cattle business by approximately 50 per cent over the last five years and this year Alliance processed more than 300,000 cattle,” he said.

There was considerable interest from farmers in the co-operative’s new premium Handpicked Lamb offer, which was part of Alliance’s commitment to differentiating its products and rewarding shareholders, he said. 

Processing equipment is being installed at the Lorneville Plant at Invercargill. PHOTO: Supplied

Alliance Group strengthened its investment in modernising its plant network as part of a Manufacturing Excellence Programme.

“We have completed projects to lift the capacity of our Smithfield and Dannevirke plants and a $5 million programme is underway to reconfigure the venison plant at Lorneville near Invercargill so it can also process cattle. Alliance is also investing $12.5 million in new processing technology at Lorneville and another $3.2 million to upgrade the plant’s Engine Room 2,” Mr Surveyor said.

Improving health and safety performance remained paramount, with a reduction in the numbers of people getting hurt at work, and an investment of $33 million over five years on health and safety programmes..

Injury rates were falling but there was "more to do,” Mr Surveyor said.

Advertisement

 Advertise on the Southland App

Other programmes Alliance Group has invested in include a new training programme for apprentices and trades staff.

Mr Surveyor said the annual result excluded money the company could be be eligible for under the Government Wage Subsidy Scheme.

The group was working with the Ministry of Social Development to resolve the amount Alliance was entitled to retain. None of this amount would be recognised until discussions were completed. The co-operative has already returned money not required to retain jobs and income, Mr Surveyor said.

The annual result includes a $19.9m provision in relation to claimed historic partial non-compliance for employee entitlements, known as donning and doffing. 

A proposal to resolve these claims is subject to ratification by the New Zealand Meat Workers Union.  

Alliance Group’s 2020 Annual Report can be viewed on its website HERE.