Silver Fern Farms loss grows as weak euro, pound sap revenue, cuts debt

Silver Fern Farms, the South Island meat company, posted a bigger first-half loss as a weak euro and pound sapped the firm’s export revenue to Europe.  

The company made a net loss of $9.2 million in the six months ended February 28, compared to a $6 million loss a year earlier. Revenue shrank 22% to $784 million as a strong New Zealand dollar and weak pound and euro cut the value of the company’s revenues to the Euro-zone and Britain. The kiwi gained 7.2% against the euro over the period and recently traded at 54.26 euro cents and rose 9.5% against the pound, recently trading at 47.28 pence.

“The impact of the appreciating currency can be translated into $18 per lamb and $200 per prime steer less than the same time in the previous year,” the company said in a statement. “The results are considered acceptable in light of the season, the current international trading climate and the $16.5 million (operating) loss recorded for the comparable period in 2009.” 

Silver Fern Farms slashed bank debt to $205.4 million from $308.2 million a year ago. 

The company will be looking to tap the government for cash later this year in an R&D joint venture with PGG Wrightson and dairy herd breeder Livestock Improvement Corp. to improve the efficiency of red meat production.

The JV is preparing a business plan for the government’s investment advisory panel for the Primary Growth Partnership. Silver Fern’s meat revenue sank 23% to $668.2 million. The company said March and April had been positive with plants running at capacity, and that it was now in a “profit position.” 

“The challenge will be to maintain the profits achieved through to year end, particularly lamb retention choices, as a higher retention will have a negative impact on the remainder of the season, but will have a positive impact in the medium term due to increased capital stock numbers,” it said.  

Silver Fern Farms began rebuilding its inventories in the six month period, which was at $201.4 million as at Feb. 28, up from $150.4 million at the end of August, though down from $356.4 million in the corresponding period in 2009.  The shares, which trade on the Unlisted platform, last changed hands at 61 cents, and have gained 5 cents this month.  

Businesswire.co.nz

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