12 Nov 2012

Alliance forecasting turnaround

7:25 am on 12 November 2012

[b ] New Zealand's biggest sheep meat processor and exporter Alliance is forecasting a turnaround in this year's financial results after posting a $50.8 million net loss for the past year.

Alliance's loss its first in 20 years includes restructuring costs of $13.5 million from shutting down sheep and lamb processing at its Mataura plant in response to declining sheep numbers in the south.

The Southland based co-operative says it and other meat companies failed to respond fast enough to falling demand in economically challenged overseas markets and paid too much for livestock for too long. They also saw the high New Zealand dollar eat into returns.

However, Alliance chief executive Grant Cuff says there are signs of some stability returning to the market.

Mr Cuff says because of the significant price declines around the world, sheep meat prices are now better aligned relative to pork, poultry and beef in particular.

Mr Cuff says the demand is starting to pick up for sheep meat. He says it means prices paid for this will be lower than the previous two years, but it is hoped this will not create major difficulties for farmers.

Rising demand and prices for sheep meat in China, a new lamb trade to Brazil and an exclusive deal to supply chilled lamb to Marks & Spencer in the United Kingdom are also giving Alliance some cause for optimism.