Dairy Meats continues record performance

For Immediate Release October 11 2002

Dairy Meats continues record performance

The farmer-owned calf processing cooperative, Dairy Meats NZ Ltd, has turned in another record performance for the 2001-02 financial year.

Gross sales for the period were up 21.5 percent to $104.3 million ($85.9 last year), while payments to calf suppliers soared to $58 million ($34.3). Operating expenses were up $3.6 million to $42.2 million.

The net operating surplus before taxation was $2.5 million ($11.6 million), while the net surplus for the Group before taxation and the adjusted valuation of its investment in Affco, was $4.053 million ($12.995 million).

A favourable exchange rate and firm product values helped to push up earnings, while added-margin activities continued to increase as a percentage of total business. Revenue from added-margin products is now approaching 25% of the company's revenue flows.

As a cooperative company, Dairy Meats is owned by its supplier/shareholders and its emphasis is on maximising returns to its owners. The company's profits combined with the cash reserves needed to run the business prudently year to year, influence the end of year results with all surplus funds paid out to members.

Over the last two years, as well as retaining funds to provide cash reserves to finance the following year's activities, profits were also retained to fund the redemption of shares held by the New Zealand Dairy Board. These actions have strengthened the balance sheet of the company and have enabled Dairy Meats to pay out a significantly higher proportion of gross revenue in procurement, without weakening the company in any way. Shareholders' funds at year end totalled $39 million (a small increase over last year) made up of $12 million in paid up capital and $27 million in retained earnings and reserves.

Directors say despite adverse price signals from the market place for the current financial year which will result in a decline in the payout, the company is well placed with a sensible treasury position and solid forward sales, and will continue to deliver unsurpassed service while remaining financially competitive.

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