By Monique Steele of RNZ
Alliance Group, a farmer-owned co-operative, has reported a loss of $95.8 million after tax for the year ended September in its 2024 annual report. The closure of a large Timaru meatworks has cost the company more than $51 million, including a one-off charge to cover redundancies and closure of the 139-year-old site. The closure of the Smithfield plant in Timaru resulted in 600 job cuts.
Excluding these costs, the underlying loss for the year was $44.5 million, showing an improvement from the previous year. The company cited tough global trading conditions, particularly in markets like China, as a contributing factor to the financial results.
Alliance Group chairperson, Mark Wynne, expressed disappointment in the results but mentioned that recent steps taken by the co-op have positioned it to ride the upturn in global red meat pricing. The company is forecasting a return to profitability in the current financial year after reducing costs, rationalizing processing capacity, and investing in technology.
Capital raise and market challenges
Alliance Group asked farmers for capital for the first time in 32 years in April, and appointed Craigs Investment Partners to explore external capital-raising options. The company is considering remaining fully farmer-owned, a hybrid ownership model, or selling, with the final decision resting with farmer-shareholders.
CEO Willy Wiese highlighted the challenging global market conditions, with weak prices due to consumers tightening spending. Sales to the Chinese market decreased significantly, prompting the company to focus on establishing more stable markets outside of China. Despite the tough market conditions, there has been steady growth in demand and prices have started to climb.
Alliance Group is working on rebuilding trust with farmers through equitable pricing, loyalty programs, and technological advancements. The company has invested in internal computer upgrades, inventory management, and technology for measuring intramuscular fat. The annual meeting is scheduled to take place in Gore on December 18.
