New Zealand-Bad year for meat giant.

NEW ZEALAND-MEAT GIANT HAVE BAD YEAR.

Silver Fern Farms blames seasonality and currency volatility for the impact on its half-year results, in which it reports a net loss of $5.9m for the six months ended February 28, 2009.

Revenue of $1.24 billion was up from $884.5m for the same period to February, 2008.

While revenue increased as a result of international market gains and currency depreciation, the results reflect timing changes in marketing programmes based around a flatter sales profile aimed at aligning supply to year-round customer requirements, the company said in a press statement.

It also said it had to contend with an exceptionally volatile currency which had fluctuating impacts on revenues and margins.

Silver Fern Farms’ chief executive Keith Cooper said the results would have been similar to the comparable six-month period to February 2008 adjusted for currency and timing of sales volumes.

"Working capital requirements for the period were also substantially up on last year’s as a result of the higher than forecast kill – albeit at lower overall levels than 2008 – lower currency, the early season and shortening of customer orders as they assessed the impact of the international debt crisis," he said.

"So while disappointing, the result is considered acceptable given the seasonality of the meat industry," Mr Cooper said. "It is also gratifying to note that farmer returns have moved to more sustainable levels, which is positive news for the pastoral sector as a whole."

Mr Cooper said the company would continue to work towards implementing its plate to pasture strategy.

"There were a number of initiatives on track for the remainder of the current financial year, including the consumer brand launch, supply chain management and the installation of robotic technologies and X-ray yield grading," he said.

Chairman Eoin Garden said Silver Fern Farms was currently evaluating capital raising options to fund the business reinvestment programme and insulate the company from the potential risk associated with the international credit crunch.

"A share issue has a number of inherent benefits, while ensuring farmers retain control of their processing and marketing assets, the cornerstone of the co-operative model," he said.

The company is planning to launch the capital restructuring and governance review to shareholders during July.