Silver Fern Farms turns to FY loss on inventory writedowns, soaring livestock prices
Nov. 13 (BusinessDesk) - Silver Fern Farms, New Zealand’s biggest meat processor and marketer, posted a full-year loss after a drop in demand forced it to write down inventory valuations while it had to compete for livestock at "unsustainable” prices.
The net loss was $31.1 million in the year ended Sept. 30, from a profit of $30.8 million a year earlier, the Dunedin-based company said in a statement. Sales fell to $2.03 billion from $2.1 billion.
The company said the 2011/2012 season began with ideal pasture growing conditions which meant farmers tended to hold back livestock. As a result markets were short of product versus historical supply and global prices for lamb escalated “to unsustainable levels.”
There followed a sharp fall in demand and value that was reflected back to suppliers and resulted in writedowns to inventory valuations in the year of about $25.6 million. Throughout, Silver Fern had to continue operating, including having to “compete for livestock at unsustainable prices.”
The company’s operating cash flow was a deficit of $105.6 million from a deficit of $7.5 million a year earlier.
Shares of Silver Fern trade on the Unlisted platform. They last changed hands at 83 cents, valuing the company at $83.3 million.