Alliance profit result best since 2009
Alliance Group has reported an operating profit of $41.9 million before tax and distributions for the 12 months ended on September 30, up from $27.3m the previous year.
Chairman Murray Taggart said the improved performance came after another challenging year, and it reinforced the validity of Alliance’s reinvestment strategy, with several years of sustained capital reinvestment reflected in the result. It was the best result for the company since 2009, he said.
The group’s profit after tax and distributions was $23.8m, and its turnover was $1.8 billion.
A distribution of $8.5m will be made to farmer-shareholders, in addition to $16.7m in loyalty payments already paid this year.
Taggart said strong international prices, cost reductions, and the introduction of more flexible labour and more robotics had all contributed to the success.
Introducing a premium meat programme had also helped the company capture another layer of value in the market, he said.
Taggart acknowledged the way staff had managed the response to Covid-19 and supply chain issues. ‘‘We have experienced significant global supply chain disruption over the last 12 months,’’ he said.
‘‘Our people worked with farmers, transport providers and shipping companies to make sure we were able to continue to move livestock off farms and utilise both our plant network and infrastructure to ensure this was almost invisible for farmers. We have ended the year in a strong position, but we know the next 12 months will continue to be volatile.’’
Chief executive David Surveyor said that while he was pleased with the improved profit result, the cooperative had global customers seeking product that it could not load and ship at the rate it would have liked. ‘‘This has had a meaningful impact on our inventory and cashflow ... It is our view that global logistics and supply chains will be challenged well into the foreseeable future; therefore we are improving systems and processes to speed our cash cycle.’’
Overall, it had been a strong year, he said. Alliance was starting to see investment in premium programmes deliver intended value to farmers. Support from farmers in the premium hand-picked lamb and beef portfolio continued to strengthen as premiums paid for qualifying animals increased.
‘‘This year, we increased our bovine network capacity by 10 per cent. We processed more cattle this year than the previous year. While this is good news for farmers and customers, we now need to leverage capacity and fully realise efficiencies if we are to achieve our ambitions,’’ Surveyor said.
The annual result also includes allowances for historical employee entitlements. Last year’s result included a $19.9m provision in relation to claimed historic partial non-compliance for entitlements known as donning and doffing.