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 after it had to compete for livestock at "unsustainable" prices.
The net loss was $31.1 million in the year ended September 30, from a profit of $30.8 million a year earlier, the Dunedin-based company says in a statement. Sales fell to $2.03 billion from $2.1 billion.
The company says the 2011-12 season began with ideal pasture growing conditions, meaning 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".
Then 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 cashflow 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.