Annual Results 2021: Silver Fern Farms continues strong investment and transformation through disruption

"Posted" 31/03/2022

Note: the following information covers the results for two separate companies; Silver Fern Farms Co-operative Limited, and its investment, Silver Fern Farms Limited. Silver Fern Farms Co-operative Limited and Shanghai Maling Aquarius Limited are the equal joint owners of Silver Fern Farms Limited.

Silver Fern Farms Co-operative and its investment, Silver Fern Farms Limited, have today released their Annual Results for the 2021 year.

Silver Fern Farms Co-operative Chair, Rob Hewett, says that while 2021 posed many challenges, Silver Fern Farms has continued its transformative investment programme across the business.

“The Board’s focus through 2021 has been providing stability through a continued period of change and uncertainty, but also ensuring the operating company continues to increase investment in sustainability, technology, and infrastructure for the long-term benefit of shareholders,” says Hewett.

“Despite current strong farmgate prices for our suppliers, the paradox is that farmer confidence is low due to the extent and pace of change they are confronted with. While it’s important the business continues passing through the value in the market at the moment, the Board is equally focused on converting our favourable financial position into longer-term confidence for our farmers.

“We’ll do this by continuing to invest directly in the business and developing more market-led premiums,” he says.

Hewett said the last year saw some significant milestones in the company’s industry-leading sustainability programmes. “Investment in initiatives such as Net Carbon Zero beef and in infrastructure such as the Marshalling Floor at Pacific reflect the core of our market-led strategy,” says Hewett.

“The work we are doing to reduce the environmental impact of our processing operations is just one of the ways we’re making sure we do the right thing by our customers and the wider community, who increasingly want to know that their red meat is sustainably produced. Our investment in coal-out projects, such as at our Pareora site, demonstrate that we’re on target to end all coal use in our operations by 2030.

“While we still have some way to go yet, we’re confident that the direction we are travelling in will translate into higher returns for what we produce and a more positive outlook on the sector for our farmer suppliers,” he says.

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Silver Fern Farms Limited Chief Executive, Simon Limmer, says strong global protein prices are masking the complexities of running the business at the moment.

“Demand and pricing for red meat across our key markets has been at historically strong levels but like all exporters we have been challenged in our ability to operate at optimal levels and navigate supply challenges into market,” says Limmer.

“Predicting, managing, and mitigating change has now become our new business-as-usual. The benchmark we have set is not simply to get through periods of disruption unscathed but to take periods of disruption as a given and continue delivering against our strategy.

“Our 2021 results can be put down to the efforts of our staff who have continued fronting to work under challenging conditions and I’m incredibly grateful for all our site and logistics staff in particular,” he says.

Limmer says that the business’s Plate to Pasture market-led strategy remains unchanged, and that sustainability is becoming a core focus embedded into everyday decision-making.

“One of the most pleasing aspects of last year is the clarity we’ve built around our sustainability goals. While we are still early in this journey, we are accelerating Silver Fern Farms’ transition to a nature-positive red meat brand, that incentivises low emissions and regenerative farming practices,” he says.

“Our success has to continue across a longer-term horizon, and that’s why we made a record $60.5 million investment in the business last year. The bulk of this has gone into upgrading our processing sites which in some instances have a history of over 100 years.

“Our investment in new infrastructure at our Pacific site in Hawke’s Bay is now operational and adding greater chilled capacity in the region. This investment gives us both more optionality in market, particularly in China, and more options of supply for our local farmers.

“We have also shaped our capital investment programme to support our sustainability goals.  This includes investment in transitioning from using coal to using electricity and biomass, smart lighting, hot water system management and overall water use reduction.

“Similarly we are investing strongly into our capability building, which includes systems and technology to support traceability and digitising processes and systems that are making our business run more smoothly and efficiently.

Limmer says that while supply chain challenges don’t have any sign of abating soon, the business is confident about the outlook.

“While many of the risks we faced in 2021 still remain in our outlook over the next few years, we go into this period with renewed optimism and confidence,” he says.

 

Financial Results Summary

• Silver Fern Farms Limited result for the 12-months to 31 December 2021:
  • Net profit after tax $103.8m (FY2020: $65.4m)
  • Revenue $2,749.6m (FY2020: $2,490.1m)
  • Total Livestock Premium Payments in 2021 $6.9m (FY2020: $5.2m). Accumulative total premium payments now over $30 million.
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) including share of associate earnings $179.7m (FY2020: $125.7m)
  • A 100% imputed dividend declared in relation to FY2021 $46.7m (FY2020 $26.2m)
  • Increased investment in capital expenditure, up $8.0m to $60.5m. 
• Silver Fern Farms Co-operative result for the 12-months to 31 December 2021:
  • Net profit after tax $51.5m (FY2020: $31.6m)
  • Dividend to be received based on FY2021 $23.4m (FY2020: $13.1m)
  • No debt. Cash and short-term deposits of $23.4m
  • Total Shareholder Equity of $369.0m (FY2020 $327.4m)
  • Co-operative declares dividend and patronage Reward for shareholders totalling $18.4m (FY2020 $8.0m)
  • A 100% imputed dividend of 12.9 cents per share payable to all ordinary and rebate shareholders
  • A 100% imputed patronage reward of 12.1 cents per share is payable on qualifying shares to supplying shareholders based on supply during 2021.
  • Closing share price at 30 March 2022 - $1.50

• Silver Fern Farms Ltd is New Zealand’s leading processor and marketer of beef, lamb, mutton, venison and associated products to more than 60 countries and regions.
• The company operates 14 processing facilities throughout the country, employing more than 6,000 staff.
• Key markets in New Zealand, China, North America, the United Kingdom and Europe, Asia, and the Middle East are supported through a network of international offices.

ENDS

For further information, please contact:

FOR ALL MEDIA QUERIES	FOR SHAREHOLDER QUERIES
Bill de la Mare	Clark Taylor
Head of External Affairs	Shareholder Relations Manager
Silver Fern Farms Ltd	Silver Fern Farms Co-operative
021 924 331	029 914 5060