Alliance to offer shares
Alliance Group will offer shareholders a share bonus, farmers are being told at the meat company’s roadshow. Chief executive David Surveyor told 60 farmers in Feilding last Tuesday that Alliance would offer a share per stock unit killed at its meat plants to current shareholders.
‘‘So if for instance a client killed 3000 lambs, they would be offered 3000 shares. It is 12 shares per cattle beast,’’ said chairman Murray Taggart.
Further details will be announced later. The 20 roadshows throughout the country end in Southland on October 19.
The farmers were told a dividend would also be paid, with details announced with the annual profit result next month.
’’We halved our debt. The banks are no longer upset at us, and want to support us,’’ said Surveyor.
He said the group had cut its debt of $42 million in half during the past year, and at the same time had paid farmers well for their stock.
The company had done well, but could do better for its 5000 farmer shareholders, he said.
Taggart said the company was now more attractive to investors.
‘‘We have grown with more than 200 new shareholders.
Surveyor said the company had better market penetration partly because of an aquisition in Singapore and people on the ground were Chinese and knew the market. In the United Kingdom specialists were dedicated to food service.
‘‘They know the market better than we do in downtown Invercargill [site of head office].’’
Taggart said venison prices were strong and lamb was expected to be about the same price as last year, but the strong beef price was weakening.
‘‘In China and North America, lamb prices will stay strong, but beef will soften as Brazil is increasing its kill, and in Japan they have 50 per cent duty on beef imports, so beef going in there will go elsewhere and impact on our markets.’’
He said total livestock pricing was up $100 million on last year which meant farmers were being paid more for their stock.
‘‘About $30m came from restructuring and efficiency, but the rest came from global markets which have been kind.’’
Surveyor said the company had spent millions on plant improvements and mechanisation, and would continue investing.
He said said Alliance needed to continue improving its safety record which would lift its operational efficiency.
‘‘We used to have one in eight or nine injured so they had to see a doctor. Today it is one to 36 so there has been a substantial improvement, but there is a long way to go. We need every single one of our employees ro go home safe and intact.’’
Surveyor said forecasting stock numbers expected to enter plants was important.’’plants half full are really expensive.’’
However, there was criticism from some farmers that they ended up carrying stock in wet conditions when Alliance’s Levin plant closed with little notice.
Livestock and shareholder service general manager, Heather Stacy said lamb prices were likely to be $5.90-$7 a kilogram from now until Christmas and $5.50-$6 after Christmas.
Sheep prices were expected to be $4.25-$4.40 and after Christmas $3.50-$3.95, prime cattle $5.50-$5.90 and after Christmas, $5.10-$5.55 and bull and cow $4.30-$5.30 and after Christmas, $4.80-$5.20
She said the risks for both lamb and beef, were movements in the exchange rates, Brexit and any demand changes from the United Kingdom and China as well as an additional beef production from rival countries, Australia and Brazil.