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Richmond Remedies Poor Performing Parts Of Biz

Media Statement November 7, 2003

Strong Result As Richmond Remedies Poor Performing Parts Of The Business

Richmond Limited today announced an operating surplus before taxation of $20.9 million, non-recurring costs of $0.9 million and a pre-tax profit of $20 million ($6.5 million loss in 2002).

Non-operating costs included redundancies at two operating sites and court-related costs.

Richmond had total revenues for the year of $1.22 billion, 7% down on the previous year ($1.31 billion). It was a year in which the value of the NZ dollar increased significantly, partially offset by increases in throughput volumes.

Chairman Sam Robinson said the full-year result was gratifying because it reflected improvements in the poorly performing parts of the business that lead to the loss of the previous year.

Richmond will pay a fully imputed final dividend of 2.5 cents per share on November 28, 2003, taking the total dividend for the year to 7.5 cents per share. This compares with 5 cents per share paid in 2002.


Consolidated Full-Year Result
2003
$M 2002
$M
Total Revenue 1,222.2 1,314.5
Surplus/(deficit) from Operations before Taxation 20.9 (3.9)
Non-recurring costs (0.9) (3.7)
Surplus/(deficit) before Taxation 20.0 (7.6)
Taxation (7.1) 1.1
Net Surplus (Deficit) after taxation 12.9 (6.5)

Mr Robinson said while it was a year of two very contrasting halves, there were many positives the Company could take from the year, and these reflected a strong team performance on the part of all Richmond’s people.

Seasonal conditions in the first half of the year were very favourable to the Company, with dry conditions creating heavy livestock flows. This allowed the business to take full advantage of its size and scale, and the investments made in value-added processing and staff training. Many of Richmond’s plants established new production records during the year.

Richmond continued to invest in the quality of processing facilities, with a total of $6 million spent in the primary processing areas of the Dargaville and Oringi plants. Both plants were initially designed almost solely for high chain speeds, while in modern plants there is a more complex processing matrix. There is a higher weighting on hygiene standards, workplace safety and new product recovery. The changes at these plants have resulted in redundancy costs being incurred during the 2003 year. Both these sites are now operational on the new configurations and have high paybacks on the capital spend, commencing in 2004.

Mr Robinson said the Company continued to generate strong operating cash flows during the year, and there had also been an improvement in shareholder equity to total assets as at September 30, 2003.

Cash flow and financial position (Consolidated)
2003 2002

Positive Operating Cash flows $39.5 million $62.1 million

Total Group Assets $282.3 million $298.6 million

Shareholders’ Equity $129.4 million $117.9 million

Shareholders’ Equity/Total Assets 45.8% 39.5%

New Chief Executive Appointed
Mr Robinson said Richard Carver, the new Chief Executive, had brought to the Company a culture of challenging the ways of the past and had worked with the leadership team to increase the focus and energy to achieve continuous improvement in the business.

“This has included a proposed new business structure based on species lines, which is designed to better align the business with the strategic plan, and give the leadership team more time to develop new strategies for the future as a food business. The company is intent on being more customer and farmer focussed and must continue to improve at a faster rate than its competitors.”

Outlook for 2004

Chief Executive Richard Carver says he expects the coming year to be a more challenging one for Richmond, with success fully dependent on maintaining the focus that was evident during the past year, and on the ability to improve in all parts of the business.

“We have developed some momentum which we will seek to maintain.”

He said the drop in the lambing percentage across the North Island coupled with additional sheepmeats processing capacity augurs for a tougher procurement market for livestock. The severity of the reduction in the sheepmeats business is likely to be only partly compensated for by improvements in other areas of the business. The 2004 budgeted net profit before taxation is $13 million.

“However, one of the company’s key strengths is the diverse nature of its business – lamb, beef, venison, bobby calves, pelts, hides, NZ Division, and pharmaceuticals - and we are committed to maximising the advantages across all these sectors.”

Mr Carver said there would continue to be a strong focus on the people in the business, developing their skills and having a safe workplace.

“There is a shortage of skilled people in this industry. To offset this situation we need to progressively introduce new technologies and give our workforce every opportunity to step-up to positions that require new skills.

Since becoming CEO, Richard Carver has visited Richmond’s customers in a number of major markets, including Japan, Asia, the Middle East, United Kingdom and Europe and attended the Anuga food fair while in Germany.

”Sheepmeats globally continue to perform well and the outlook for beef and venison are improving. Richmond has strong marketing globally and will continue to focus on improving returns to all stakeholders”.


ENDS

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