Strong kiwi squeezing AFFCO margins

Wednesday 19th August 2009

AFFCO Holdings, the North Island meat processor, said its processing margins have been squeeze by a strong kiwi dollar and dwindling supplies of livestock.

In its half year report, the company expressed a "cautious outlook for the second half” given forecast kill numbers and market conditions generally. As the fourth quarter draws to a close this caution has proven well justified, it said in a statement today.

“Reduced livestock numbers, the volatility and level of prevailing exchange rates and a tightening of market conditions offshore” have combined to “to reduce processing margins in the second half,” the company said.

Affco remains well capitalized with a strong balance sheet and tougher operating conditions have been met with a stronger focus on core efficiencies, cost reductions and further development of key market relationships with core customers, according to the statement from chairman Sam Lewis.

The shares were unchanged at 42 cents yesterday and have gained 10% this year.

Businesswire.co.nz

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