Silver Ferm Farms

[Sideshow Bob]

From one record year to another......

Not sure if a record bad result. Maybe worst since the 90's and Waitaki days? Certainly they were saying prior that worst since 2012 but that was 'only' about $50m loss.

Alliance are in a tricky position. Markets aren't improving, especially for lamb which is their major volume, and now their debt has cranked up by another $60m and so will their interest costs. Last year interest costs were up $11m, and no doubt banks will start to get a little jittery.

What will be the reaction of their farmer suppliers? No doubt their competitors will be circling (although who wants more lamb currently?)

It has been a tough year for all - but not all companies have lost money. But is a reminder of what relatively slim margins these guys operate on. SFF's record year last year was 5.78% net profit, which is a historic exception. 2021 was 3.77% and 2020 was 2.6%. So don't need the wind to change much to have a material change.

Rising markets have increased these guys revenues so much. This year Alliance's revenues were down $207m. SFF 2022 revenue was $777m more than 2020, and $524m more than 2021. I think this has potentially covered the rising costs these guys are incurring in their businesses, through Covid, inflation, growth in overhead etc.

The limited public info on various companies is frustrating, but is what it is. Now have to wait for SFF. Certainly a year-end of 30/9 is the low point in Alliance's seasonal activity, so their stock/debtors/cash looks as good as possible. End of December the season is starting to ramp up by some degree.

Going to be an interesting SFF report. Especially in the South, a decent result will put real additional pressure on Alliance.