Silver Fern Farms Co-operative: Positive 2019 result gives certainty in disrupted global environment

"Posted" 15/04/2020

• 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 joint owners of Silver Fern Farms Limited.
• Silver Fern Farms Co-operative result for the 12-month period 1 January 2019 to 31 December 2019:
  • Net profit after tax $34.9m (FY2018: $0.9m)
  • No debt, cash and short-term deposits of $17.7m
  • Total Shareholder Equity of $304m (FY2018 $269m).

 

• Silver Fern Farms Limited result for the 12-month period 1 January 2019 to 31 December 2019:
  • Net profit after tax $70.7m (FY2018: $5.8m)
  • Revenue $2.6b (FY:2018 $2.4b)
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) including share of associate earnings $124.3m (FY2018: $32.4m)
  • Increased investment in capital expenditure, up $3m to $32m.

 

Dunedin 15 April 2020:

 

Silver Fern Farms Co-operative has reported a net profit after tax of $34.9m for the 2019 financial year. Its investment, Silver Fern Farms Limited, reported a net profit after tax of $70.7m for the 2019 financial year.

Silver Fern Farms Co-operative Chairman Richard Young said the financial result achieved by the Co-operative and Silver Fern Farms Limited for the 2019 year provides stability for both the Co-operative and the operating company.

 

“The Co-operative is in a strong position with no debt. Whilst this was achieved last year, we now have a strong platform to weather a period where our country and the world is in a period of considerable economic uncertainty.”

 

 

“We are pleased with the performance of our investment. Silver Fern Farms Limited’s result for 2019 was the strongest financial result in the past decade, and one that is more fairly representative of the significant scale of the business and our investment in it.”

 

Silver Fern Farms Limited’s Chief Executive Simon Limmer said Silver Fern Farms Limited’s performance in 2019 was positive given the new operating environment.

 

“While global market conditions and domestic challenges move by the day in 2020, our achievements in 2019 set us up well to meet today’s challenges.

 

“Silver Fern Farms is robust enough to withstand the global disruption caused by Covid-19. Our financial stability provides a platform to execute our strategy, develop our people, support our farmers, and feed New Zealanders and the world with sustainable, naturally delicious red meat.

 

“Last year’s performance is important for our 7,000 staff. Keeping our people safe and employed under the current environment is paramount to us. They are fundamental to the recovery. We are taking our responsibility seriously around how important our role is in the recovery of our country.

 

For the period Silver Fern Farms Limited achieved revenue of $2.6 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) including share of associate earnings of $123.4m, and net profit after tax of $70.7m and net profit before tax of $89.6m. The Company again increased the level of capital expenditure, up $3m to $32m over the course of the year. Total shareholder equity is at $571m up from $501m at the end of December 2018.

 

“We came into 2019 facing an uncertain international geo-political and trade environment. However, the impact of African Swine Fever on Chinese pork stocks drove global consumer demand for protein and countered any downsides of Brexit and USA-China trade issues. 2019 was a China story. With customers in China looking to beef and lamb items to fill some of the void left by the culling of pigs, it set a positive benchmark for other markets to follow and they responded accordingly.”

 

“Through all of these dynamic shifts and turns in the markets we have needed to remain strongly customer focused and agile in order to take advantage of the opportunities they present. Our sales and marketing, and operational teams did an exceptional job in managing a changing market mix, growing our market penetration in markets such as China while still retaining optionality in traditional markets.

 

“We are creating a stronger alignment across our market, operations and supply functions in order to drive more effective decision making and maximise market returns.”

 

Richard Young said the Co-operative is taking a conservative approach to the current operating environment.

 

“Since balance date, Covid-19 has fundamentally changed the market. Market dynamics are changing daily, making scenario modelling of short and medium-term financial impacts difficult to accurately determine. Liquidity and cash flow management will continue to be critical in maintaining optionality in managing Silver Fern Farms Limited’s relationships with all stakeholders in uncertain times.

 

“We remain confident that Silver Fern Farms Limited is in a strong financial position. With cash on hand in

the business, they will be equipped to respond to the pending rise in consumer demand post Covid-19 disruption.

 

“To ensure additional cash flow flexibility is maintained within Silver Fern Farms Limited during this time, Silver Fern Farms Co-operative and Shanghai Maling made the decision and requested Silver Fern Farms Limited to defer the dividend payment until the outlook for the global operating environment becomes clearer. As we come through the current crisis and enter a ‘new normal’ Silver Fern Farms Limited’s board will

gain more clarity around business impacts, thus determining dividend payment options.

 

“The Co-operative Board will then communicate any decision around distributions to Co-operative shareholders at that time.”

 

In 2019 the Co-operative embarked on a process of reviewing and re-defining its strategy.

 

“The role of the Co-operative has matured since the formation of our partnership with Shanghai Maling, and we have re-defined our strategy,

 

“While no longer governing the day-to-day operations of Silver Fern Farms Limited, we continue to have a crucial role – one that is more than simply that of an investor. We are determined to build on our strong foundations and make sure our Co-operative is sustainable and continues to create enduring value for shareholders. Silver Fern Farms Co-operative’s role is to support farmers now, but just as importantly to support future generations of food producers.”

 

Our renewed Purpose is of: ‘Leading progressive food producers committed to a sustainable future’. Our vision is to be ‘A proud collective of consumer-focused farmers, innovating to meet the highest possible standards of sustainable farming practice.’ This new vision and purpose for our Co-operative align with Silver Fern Farms’ vision, of ‘being the world’s most successful and sustainable grass-fed red meat company’.

 

The Annual Report will be available on April 15, ahead of the Co-operative’s Annual Meeting which will be held as a Virtual Meeting on Thursday 30 April.

 

 

 

 

Key financial metrics FY 2019	Silver Fern Farms Co-operative Ltd.	Silver Fern Farms Ltd.
Net Profit Before Tax	$35m	$89.6m
Net Profit After Tax	$34.9m	$70.7m
EBITDA	N/A	$123.4m
Revenue	N/A	$2.6 billion

 

ENDS

 

For further information, please contact:

Richard Young	Clark Taylor	Simon Limmer
Chair	Shareholder Relations Manager	Chief Executive Silver Fern Farms Ltd
027 484 8986	029 914 5060	021 816 725