Blue Sky Meats annual profit sinks 36%, under-used plant blamed
Blue Sky Meats, whose shares trade on the Unlisted platform, reported a 36% slide in annual profit, which it blamed on the underutilisation of its processing facilities.
Net profit fell to $1.2 million in the year ended March 31, from $1.9 million a year earlier, the Southland-based company said in a statement. Blue Sky, which processes sheep, cattle, goats and deer, reported a 7.2% increase in revenue to $102.1 million.
Chairman Graham Cooney said the result wasn't as good as directors had wanted and was mainly because the company's facilities were underutilised. That issue was not unique to Blue Sky, which started its export processing facility in 1987, and applied to all sheep meat processing companies.
"The fact remains that the industry is missing out on many dollars by continuing to underutilise facilities," Mr Cooney said. "While many of the industry's woes can be blamed on companies, this issue can only be solved by farmers."
Directors declared a dividend of 5c per share at a total cost of $576,305.
Blue Sky acquired Gore-based Clover Export for an undisclosed sum late last year, to add to its processing capacity in beef and venison. Directors said the price paid was fair and reflected the facility's quality but, to maximise beef throughput, further capital spending would be required.
"The investment was justified by continuous feedback from both sheep and bobby calf suppliers that they were unable to commit more animals due to the company's inability to process all species, something other processing competitors had used as their argument with livestock procurement," Mr Cooney said.
More capital expenditure would also be required in the next few years to improve the company's environmental performance.
The company has signed a procurement, processing and marketing partnership with venison producer Duncan NZ. Blue Sky can now provide venison processing to its suppliers and product to its sheep meat markets, while Duncan NZ can provide sheep and beef processing to its deer suppliers and product to its markets.
"This is a small step in industry rationalisation," Mr Cooney said.
In 2013 Blue Sky withdrew from talks with Alliance Group about a possible takeover by the fellow Southland-based meat processor after failure to agree on key terms.
Blue Sky's shares last traded at $1.80 on the Unlisted platform in November, giving it a market capitalisation of $20.7 million.