Richmond success has a sting in the tail

The Hastings-based company has reported a full-year net surplus of $20.7 million, well up on last year's $11.7 million profit and also higher than its prospectus prediction of $19.4 million. Total revenue was $1.425 billion compared with $1.13 billion last year.

Chairman, Sam Robinson, says the result was outstanding although the company acknowledges that a small portion of earnings came from a one-off transaction relating to the restructuring of the NZ Lamb Company, and the pre-tax operating performance was marginally below forecast.

"Notwithstanding, I am confident that in the past year we have built an even stronger platform for future growth and value."

Mr Robinson says after the challenges of the first six months, the company had a strong third quarter, but a very difficult final quarter because of the shortage of winter stock, particularly in August and September.

"To protect valuable year-round customer relationships that underpin our business 12 months of the year, there were periods when we operated on negative margins. It was the most difficult final quarter the company has experienced for many years, and took the shine off the year.

"Having said that, to have experienced such a final quarter, and still achieved a record result signifies that we have a business of real quality and class."

Chief executive, John Loughlin, says the company has performed well in a difficult trading environment, and significant progress had been made in building a strong business based on four key pillars.

"These are a powerful beef business, and a powerful lamb and sheep business. The third pillar, a group of smaller businesses in venison, calves, and local marketing, and the fourth, tertiary product processing, including marketing in leathers, pharmaceuticals and processed foods."

Mr Loughlin says in the new year the profit would be driven from margin growth and some volume growth from the higher numbers of livestock available for processing.

"Margin growth will come from the capital investment made at several key sites, as well as marketing initiatives. The volume growth will reflect the outstanding lambing percentages in the North Island, and the high dairy calves retention over the past two to three years.

"There is a commitment to exceeding this years result at the pre-tax and post-tax levels in 2002."

Richmond has announced a final dividend of 5 cents per share to bring the year's total payout to 10 cents, equating to around 20% of annual earnings. The company says it plans to increase the payout ratio to between 30-40% of normalised annual earnings over the next three years.

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