Blue Sky Meats annual profit sinks 36%, under-used plant blamed

Monday 29th June 2015

Blue Sky Meats, whose shares trade on the Unlisted platform, reported a 36 percent slide in annual profit, which it blamed on the under utilisation of its processing facilities.

Net profit fell to $1.2 million in the year ended March 31, from $1.9 million a year earlier, the Southland based company said in a statement. Blue Sky, which processes sheep, cattle, goats and deer, reported a 7.2 percent increase in revenue to $102.1 million.

Chairman Graham Cooney said the result wasn’t as good as directors had wanted and was mainly because the company's facilities were under utilised. That issue was not unique to Blue Sky, which started its export processing facility in 1987, and applied to all sheep meat processing companies.

“The fact remains that the industry is missing out on many dollars by continuing to under utilise facilities," Cooney said. "While many of industry’s woes can be blamed on companies, this issue can only be solved by farmers.”

Directors declared a dividend of 5 cents per share, at a total cost of $576,305.

Blue Sky acquired Gore based Clover Export for an undisclosed sum late last year, to add to its processing capacity in beef and venison. Directors said the price paid was fair and reflected the facility’s quality, but to maximise beef throughput further capital spending would be required.

“The investment was justified by continuous feedback from both sheep and bobby calf suppliers that they were unable to commit more animals due to the company’s inability to process all species, something other processing competitors had used as their argument with livestock procurement,” Cooney said.

More capital expenditure would also be required in the next few years to improve the company’s environmental performance.

The company has signed a procurement, processing and marketing partnership with venison producer Duncan New Zealand. Blue Sky can now provide venison processing to its suppliers and product to its sheep meat markets, while Duncan NZ can provide sheep and beef processing to its deer suppliers and product to its markets.

“This is a small step in industry rationalisation,” Cooney said.

In 2013 Blue Sky withdrew from talks with Alliance Group about a possible takeover by the fellow Southland-based meat processor after failure to agree on key terms.

Blue Sky's shares last traded at $1.80 on the Unlisted platform in November, giving it a market capitalisation of $20.7 million.

BusinessDesk.co.nz

Comments from our readers

No comments yet