Silver Ferm Farms

[iceman]

Those shares going through at $1.42 had me worried.
Was thinking the result would be poor...

They had me disappointed it wasn't me buying them :-(

[percy]

Gave me 2nd thoughts too - but in the end I just decided it was just a gap in the matrix.....:laugh:

But a little more worried about the latest trade in PAZ....

Yes that buyer at 48 got hit too quickly.
Last Saturday I sent their sales manager an email asking about subscription freight charges etc.
Thought she would reply on Monday,.Received a reply straight away.Did my order and received it on Tuesday morning.Great service,great product.

[Sideshow Bob]

Nice.....uptick in price continuing this morning.

Any more of this crazy carry-on and might see the PE over 2!! :eek2:

[percy]

Annual report makes for good reading.
https://usx.co.nz/uploads/paperclip/documents/2810/original/SFF_2022_Annual_Report.pdf?1681852238

[Sideshow Bob]

Record date tomorrow.

[Sideshow Bob]

This weeks Farmers Weekly - interesting article page 19.

https://www.farmersweekly.co.nz/virtual-publication/?utm_source=AgriHQ&utm_campaign=c363ed90fd-EMAIL_CAMPAIGN_2023_04_19_08_59&utm_medium=email&utm_term=0_-c363ed90fd-%5BLIST_EMAIL_ID%5D

[Sideshow Bob]

Happy Dividend Day! :t_up:

[iceman]

Happy Dividend Day! :t_up:

It sure was :-)

[percy]

This is a reminder that the Annual Meeting of Silver Fern Farms Co-Operative Limited will be held at the Distinction Hotel, 6 Liverpool Street, Dunedin and online via the Link Market Services Virtual Annual Meeting platform at www.virtualmeeting.co.nz/sff23 at 11am (New Zealand time) tomorrow, 3 May 2023.

Prior to the Annual Meeting, you are welcome to join us at 10.00am for a presentation from Silver Fern Farms Limited’s Chief Executive Simon Limmer on the performance of Silver Fern Farms Limited.

[Sideshow Bob]

https://www.odt.co.nz/rural-life/red-meat/two-directors-retire-after-maximum-term-reached

https://www.odt.co.nz/rural-life/industry-being-thrown-away-farmer-says

[iceman]

https://www.odt.co.nz/rural-life/red-meat/two-directors-retire-after-maximum-term-reached

https://www.odt.co.nz/rural-life/industry-being-thrown-away-farmer-says

Thanks for sharing SB. Interesting reading. I think Richard Young and Dan Jex-Blake are entitled to look back at their 10 years on the Board with significant pride. They leave a well run organisation in great financial strength.
Brilliant idea to limit Directorships to a maximum of 10 years.

[Sideshow Bob]

Thanks for sharing SB. Interesting reading. I think Richard Young and Dan Jex-Blake are entitled to look back at their 10 years on the Board with significant pride. They leave a well run organisation in great financial strength.
Brilliant idea to limit Directorships to a maximum of 10 years.

Yes, good that it is limited.

Just not sure what the situation is with Rob Hewitt - he was elected to the board of the Coop in 2008, and chair since 2013. Also co-chair of SFF Ltd.

[iceman]

Yes, good that it is limited.

Just not sure what the situation is with Rob Hewitt - he was elected to the board of the Coop in 2008, and chair since 2013. Also co-chair of SFF Ltd.

That’s not quite right. Rob quit as Chairman in 2019. He took over again when Richard Young resigned as Chairman in 2021, to “bridge the transition period to the next generation “

It will be interesting to see how ling that bridging period is !!

[Sideshow Bob]

That’s not quite right. Rob quit as Chairman in 2019. He took over again when Richard Young resigned as Chairman in 2021, to “bridge the transition period to the next generation “

It will be interesting to see how ling that bridging period is !!

Quite correct Iceman!! My apologies - I had misread the website and mistaken SFF Ltd and SFF Coop.

I have a feeling the bridge could be quite long.....

[percy]

Quite correct Iceman!! My apologies - I had misread the website and mistaken SFF Ltd and SFF Coop.

I have a feeling the bridge could be quite long.....

I been thinking the same...lol

[Sideshow Bob]

https://www.interest.co.nz/rural-news/121354/allan-barber-reports-red-meat-sector-sees-favourable-market-conditions?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+2 4+May+2023

Interesting article.....

[Sideshow Bob]

Poor season and weak market seems to be having its effect on share price. Trading at $1.40, which is the lowest level since early 2022 by my estimates.

This could be the test - all companies made good/record profits last year, but can SFF pump out a reasonable profit in an off year??? Unfortunately no half year results are published, and even though we are almost 7 full months into the financial year, no indication on how they are travelling. Last year the first ever interim divvy was end of October, based on first half performance (with no financials released). Can't see that happening this year unless they throw shareholders a bone.

[Sideshow Bob]

Poor season and weak market seems to be having its effect on share price. Trading at $1.40, which is the lowest level since early 2022 by my estimates.

This could be the test - all companies made good/record profits last year, but can SFF pump out a reasonable profit in an off year??? Unfortunately no half year results are published, and even though we are almost 7 full months into the financial year, no indication on how they are travelling. Last year the first ever interim divvy was end of October, based on first half performance (with no financials released). Can't see that happening this year unless they throw shareholders a bone.

Lamb markets look like they are going from bad to worse. Hot weather in the northern hemisphere, inflation, deflation in China, reducing consumer spending power etc, and then exacerbated by Australia pumping out large volumes.

https://www.abc.net.au/news/2023-07-18/australia-record-lamb-production-mla-where-is-it-going/102615850
https://www.mla.com.au/prices-markets/dailysummary/?species=Sheep

Australian prices down $2.50-$3.00 AUD/Kg over the past 12 months, so that is probably $60-70 per lamb. Ouch!!

Word is that one company in the North Island have stopped processing, management have walked out and closed the office and farmers have been unpaid for stock.

Industry has gone from record margins to negative margins. Negative margins have happened before though. Made money last year and giving it back this year.

Lamb processors would have to be really struggling so would be interesting to see where beef is at. That might insulate SFF, as biggest beef processor in NZ, but have had a declining lamb share in recent years.

Once again, looks like we won't see any results or updates unless SFF surprise us again, but otherwise would then will have to wait until Alliance reports - last year was mid-November.

[kiora]

" company in the North Island have stopped processing, management have walked out and closed the office and farmers have been unpaid for stock"
Didn't come up when I searched
Which town,works?

[Sideshow Bob]

A few trades yesterday. Buy side now looking thin.

[percy]

New Zealand red meat sector dismayed at Government’s latest agricultural emissions announcement



The arbitrary deadline set by the Government for pricing agricultural emissions has no justification given the sector’s progress in reducing emissions and the scale of issues that still need to be addressed, says Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA).



“The focus should be on setting up a practical and cost effective emissions measurement and reporting framework, and ensuring issues like sequestration are resolved and there are viable mitigation tools available, before any pricing is considered.



“There is no sound rationale for pricing when the sector is making good progress towards meeting emissions reduction targets,” says Kate Acland, chair of B+LNZ.



“Our sheep and beef farmers are among the most efficient producers in the world. They’ve been reducing emissions by 1 percent annually for the last 30 years so this policy will simply drive down our production and result in other less efficient countries taking our place and pushing up global emissions.



“New Zealand is the first country in the world to seek to price agricultural emissions and there is no blueprint to copy,” says Acland.



“Given that our economy is built around the production and export of food, it is essential we take the time to get this right. Proposing another unjustified cost on the sector when farmers have their backs to wall financially will only hurt rural communities and the economy.



“We acknowledge the Government says it is looking to recognise all on-farm sequestration but have given no assurances this will be in place by the end of 2025. Farmers cannot be required to pay when they are not recognised for their sequestration.



“Climate scientists also accept total methane emissions in New Zealand have been stable and declining for at least the last decade,” she says.



“New Zealand agriculture is also a world leader in emissions efficiency and the Government’s obsession with imposing a price doesn’t reflect the progress that we are all making.”



The MIA, which represents New Zealand’s red meat processors and exporters, is also concerned about the Government’s emissions announcement.



“As one of the world’s most efficient producers of beef and lamb, we’re committed to playing our part so that we can keep producing sustainable and nutritious food that contributes almost $12 billion in exports for the country’s economy,” says Nathan Guy, chair of the MIA.



“Initiatives like the AgriZero partnership between agribusiness and the Government show we are committed to accelerating the reduction of agricultural emissions.



“Although the Government has moved on from the blunt processor levy, the fact that it has taken such a long time to reach a decision that doesn’t meaningfully advance critical issues such as sequestration and viable mitigation tools is extremely disappointing - especially as the ball has been squarely in their court since November last year.



“New Zealanders can and should be proud of our red meat sector. We not only have one of the lowest carbon footprints in the world, but we are also an economic powerhouse supporting almost 100,000 jobs. Unfortunately, that’s not the message Kiwis will be hearing from today’s announcement.”



Meanwhile, Acland says the Government must also move to reduce the country’s methane targets to reflect the latest science and report on warming in addition to emissions.



“Methane is a short-lived gas, if it is stable or declining its impact on the climate is fundamentally different to carbon dioxide. That’s why it is vital that the Government starts to report on warming as well as emissions so that New Zealanders can understand the difference between methane and carbon dioxide, and therefore the different actions the agricultural sector needs to take.



“While New Zealand has recognised this difference to some extent in having split targets for methane, the targets are too high and are asking agriculture to do far more than its fair share. The targets must be reviewed from a warming perspective and amended before any price is imposed.”

[whatsup]

A few trades yesterday. Buy side now looking thin.

Latest dairy shock ! ??

[winner69]

Percy …unless things are done will it it be better to starve before we burn.

[percy]

Percy …unless things are done will it it be better to starve before we burn.

My thoughts were Labour have said goodbye to the rural vote.?

[kiora]

Percy …unless things are done will it it be better to starve before we burn.

Labour policies, high interest rates & crashing commodity prices are causing both starving & burning of the entire rural economy.
Kaching, NZ Inc will hit a very solid wall very soon

[iceman]

My thoughts were Labour have said goodbye to the rural vote.?

My thoughts exactly. Very sad & silly

[iceman]

From Simon Limmer’s latest newsletter:

“This week we announced a new partnership with Costco USA where we are introducing Net Carbon Zero beef into their online shopping site. Costco gets around 93 million visits to its online shopping site every month, and so we are pretty excited about this opportunity.“

[percy]

From Simon Limmer’s latest newsletter:

“This week we announced a new partnership with Costco USA where we are introducing Net Carbon Zero beef into their online shopping site. Costco gets around 93 million visits to its online shopping site every month, and so we are pretty excited about this opportunity.“

I am excited too.
A great opportunity for SFF .

[percy]

Red meat sector: agriculture must be central to NZ’s economic strategy

New Zealand’s red meat sector is calling on the future Government to put agriculture and the production and export of beef and lamb at the heart of a new economic strategy.

The “Putting Meat on the Bone” Briefing to Incoming Ministers document, released by the Meat Industry Association and Beef + Lamb New Zealand (B+LNZ), sets strategic challenges that New Zealand must grapple with to improve the prosperity of the country and Kiwis, and sets out five ways to do this.

The approach includes:

Putting the red meat sector at the centre of New Zealand’s economic strategy,
Aligning the country’s science and innovation system to strategic outcomes,
Partnering with industry to improve sustainability, ensuring greater coordination across government departments, and
Allowing streamlined and enabling regulation underpinned by robust impact assessments.
“Agriculture is our only industry of scale and one area where New Zealand has a significant comparative advantage on the world stage,” said MIA Chair Nathan Guy.

“The red meat sector makes a massive contribution to our economy. With the right policy settings, we could grow this substantially, but it requires government to help facilitate growth - not hinder it. Having political parties taking a long-term view will help to build political consensus to get things done.”

“There is a strong precedent for a bipartisanship approach. New Zealand’s trade strategy has established a network of Free Trade Agreements over the past 30 years that have contributed significantly to our economy and overall global competitiveness”

Beef + Lamb New Zealand Chair Kate Acland said New Zealand farmers are among the best and most sustainable red meat producers on the globe, a real advantage in a world where consumers are increasingly conscious about the impact of the food they eat on the planet.

“In order to build on this great platform, we need future governments to work with the livestock sector to develop efficient and outcomes-focused regulatory frameworks. It is also crucial that we leverage our public science and innovation system to enable farmers to improve on their environmental footprint and move up the value chain.

“What is also clear is that our farmers are under pressure from a wave of poorly crafted regulations that are putting the viability of their farm businesses at risk. The Government needs to work with us on ensuring rules are needed, fair, practical and achieve the outcomes both farmers and the country are seeking.”

Ms Acland said both sides of the red meat farm gate stand ready to partner with the future Government to turn this economic framework into a reality that benefits all New Zealanders.

Beef + Lamb New Zealand and MIA respectively represent the farmers who raise New Zealand’s world leading sheep and cattle, and the processors, exporters and marketers who sell it to global customers in more than 100 countries.

The full “Putting Meat on the Bone” BIM can be downloaded here. The two organisations’ summary political manifesto can also be viewed here.

About the red meat sector

Supports over 92,000 jobs across both sides of the farmgate.
The sector is New Zealand’s second largest goods exporter.
Meat processing is New Zealand’s largest manufacturing industry.
95 percent of red meat products are exported to 108 countries as value-added cuts.
Red meat exports generated $12b of export revenues in 2022.
GHG emissions on sheep and beef farms are down 30 percent since 1990.

[Sideshow Bob]

The buy side looks completely devoid of any bids currently.....

[percy]

Silver Fern Farms’ Simon Limmer to step down as Chief Executive
8 September 2023 General Announcement
Security: SFF


Silver Fern Farms Limited has today announced that Simon Limmer will be stepping down after five and a half years as Chief Executive. Mr Limmer will stay in his role during the transition to a new Chief Executive and will remain involved with the company in a strategic role going forward.



“On behalf of the Board of Silver Fern Farms Ltd, I have regretfully accepted Simon’s resignation however I am also very grateful for his immense contribution to the business and our industry over the last five and a half years,” says Silver Fern Farms Ltd Co-Chair Rob Hewett.



“Since joining Silver Fern Farms, Simon has doubled-down on the company’s Plate to Pasture market-led strategy and he will leave a business which is in great health and with a clear direction,” he says.



“While the company’s financial performance, investment, and returns have all increased under Simon’s tenure, one of the biggest contributions he has made has been to the development of culture and leadership.”



“The Board now commences a process of recruiting Simon’s replacement; however, we’ll continue to utilise Simon’s expertise and experience in a different capacity going forward,” he says.



Simon Limmer says that while he will miss the role, after over five years as Chief Executive he felt it was the right time to pass on the baton.



“I’ve always felt that this length of time is about the right tenure for a Chief Executive, but I am really passionate about Silver Fern Farms and the industry. It has been a very tough decision for me to take this step and consider new horizons, however I feel that now’s the time for an injection of new energy and perspective into the business,” he says.



“I’m conscious that global market conditions have created some immediate challenges, however these will pass and I’m confident in our strategy and ability to see these challenges through and continue creating new forms of value for our shareholders,” he says.



The Board will now commence an executive search for Mr Limmer’s replacement. Mr Limmer will stay on at the company during this recruitment which is expected to take until the start of 2024.





For further information, contact:



Bill de la Mare

Head of External Affairs

Silver Fern Farms

021 924 331

[Sideshow Bob]

Simon has done a great job, and leaves the company in a very good position, albeit with some challenges in the shorter term. Good guy with it too.

Wouldn't spend much time at home, as I think still living in Tauranga - which isn't near any of their hubs. Plenty of time on planes!!

Interesting that he is staying on in a 'strategic role". Most of the time incoming CEO's wouldn't be huge fans of their predecessor still being there.

As for his replacement, lets see if promote from within (like Alliance) or go outside.

[iceman]

Agree SB that Simon has done a great job. He is handing over a well managed and successful company to whoever takes over, I thank Simon and wish him very well for his future

[Sideshow Bob]

Simon has a new role already.....

https://www.scoop.co.nz/stories/BU2309/S00171/new-zealand-wine-company-indevin-group-appoints-simon-limmer-as-ceo.htm

[percy]

Simon has a new role already.....

https://www.scoop.co.nz/stories/BU2309/S00171/new-zealand-wine-company-indevin-group-appoints-simon-limmer-as-ceo.htm

I wish him well there.
Great he is going to a very successful exporter.

[Sideshow Bob]

Not looked at the share price for a while.

The price with illiquid stocks......quick drop from $1.40 to $1.20......

But is a symptom of the lack of profitability for processors this season - certainly a challenging one and we've seen Alliance chop out a few head. SFF won't be immune and operate in the same markets.

[iceman]

Not looked at the share price for a while.

The price with illiquid stocks......quick drop from $1.40 to $1.20......

But is a symptom of the lack of profitability for processors this season - certainly a challenging one and we've seen Alliance chop out a few head. SFF won't be immune and operate in the same markets.

It's a shame we don't get more frequent updates from companies on the USX. Quarterly or half yearly would be a big improvement.
SFF announced (unusually) an interim dividend on 27 October last year. It will be interesting to see if they do anything this October !

Very tempted to top up at $1.20.

[percy]

Not looked at the share price for a while.

The price with illiquid stocks......quick drop from $1.40 to $1.20......

But is a symptom of the lack of profitability for processors this season - certainly a challenging one and we've seen Alliance chop out a few head. SFF won't be immune and operate in the same markets.

I wonder if the share price weakness is signalling there will not be an interim dividend,or whether some farmers are selling shares to get their hands on some cash.?
SFF said at their agm SFF Ltd would continue their [huge] capital spend,including a big amount on IT.
Should The CoOp not get a divie from SFF Ltd, I wonder whether they will use some of their rainy day reserve capital to pay a final divie,?

[iceman]

I wonder if the share price weakness is signalling there will not be an interim dividend,or whether some farmers are selling shares to get their hands on some cash.?
SFF said at their agm SFF Ltd would continue their [huge] capital spend,including a big amount on IT.
Should The CoOp not get a divie from SFF Ltd, I wonder whether they will use some of their rainy day reserve capital to pay a final divie,?

I don’t think there is any chance of SFF Ltd not paying a dividend for this year. The SH agreement between the Co-op & Shanghai Maling sets a minimum dividend payment of 30% of NPAT

So we will definitely get a divie this year. The question is how much ?

[Sideshow Bob]

I don’t think there is any chance of SFF Ltd not paying a dividend for this year. The SH agreement between the Co-op & Shanghai Maling sets a minimum dividend payment of 30% of NPAT

So we will definitely get a divie this year. The question is how much ?

SFF Ltd would have retained a huge amount of profit in recent years. Even last year, $189m profit, Coop received $38.5m (paid out likely around $33m), but based on this, SFF would have kept about $112m. And this was only last year - while it was a record, there have been a few reasonable years in a row where they've kept a good chunk of change in the back pocket. So think they have enough for their projects, capital expenditure etc.

However for this year, they may not make a profit - and I'm probably glass half-empty, but I'm not so sure this will happen, or at least to any great degree. I understand margins are pretty poor. Lamb has been extremely difficult - lots of Australia product around and schedules there are $4's, while in NZ trying to pay $7 while markets are being flooded with Ozzie product. Understand that beef margins are pretty average and nothing special.

We get no real guidance on how things are tracking - which can be frustrating. Maybe if you went to a supplier meeting there may be some comment, but nothing wider. But the shares are primarily for suppliers, who in theory are there for the long-term while they supply stock, and not so worried on the ups and downs or timing.

Alliance are just finishing their FY 30/9 so we are going to have to wait until November for them to report. But was seen that David Surveyor left Alliance after their record year, and already going downhill.

The thing is the shares are illiquid at best. So has moved about $0.19c in recent weeks based on 40k shares and a handful of trades.

I think in terms of a divvy this year, it might just depend if they throw shareholders a bone. In the meantime, we wait! :)

[iceman]

SFF Ltd would have retained a huge amount of profit in recent years. Even last year, $189m profit, Coop received $38.5m (paid out likely around $33m), but based on this, SFF would have kept about $112m. And this was only last year - while it was a record, there have been a few reasonable years in a row where they've kept a good chunk of change in the back pocket. So think they have enough for their projects, capital expenditure etc.

However for this year, they may not make a profit - and I'm probably glass half-empty, but I'm not so sure this will happen, or at least to any great degree. I understand margins are pretty poor. Lamb has been extremely difficult - lots of Australia product around and schedules there are $4's, while in NZ trying to pay $7 while markets are being flooded with Ozzie product. Understand that beef margins are pretty average and nothing special.

We get no real guidance on how things are tracking - which can be frustrating. Maybe if you went to a supplier meeting there may be some comment, but nothing wider. But the shares are primarily for suppliers, who in theory are there for the long-term while they supply stock, and not so worried on the ups and downs or timing.

Alliance are just finishing their FY 30/9 so we are going to have to wait until November for them to report. But was seen that David Surveyor left Alliance after their record year, and already going downhill.

The thing is the shares are illiquid at best. So has moved about $0.19c in recent weeks based on 40k shares and a handful of trades.

I think in terms of a divvy this year, it might just depend if they throw shareholders a bone. In the meantime, we wait! :)

I agree with you but will be very surprised if they will not show some profit this year. The good thing is that despite the large divies we've received in the last couple of years, the cash management has been prudent and plenty left in the kitty for the operating Co to continue investing and for the Co-op to have relatively healthy cash reserves.
My relatively large holdings was bought fully aware of the illiquid nature of these shares and the reality of the huge ups and downs in the industry, just like the suppliers understand. I sold a few earlier in the year and through that and dividends have recovered my initial investment, so expect I will be sitting on my holding for a great many years to come, through some upwards and downwards cycles. I'm more likely to add than reduce, barring some unforeseen circumstances.

[Sideshow Bob]

I agree with you but will be very surprised if they will not show some profit this year. The good thing is that despite the large divies we've received in the last couple of years, the cash management has been prudent and plenty left in the kitty for the operating Co to continue investing and for the Co-op to have relatively healthy cash reserves.
My relatively large holdings was bought fully aware of the illiquid nature of these shares and the reality of the huge ups and downs in the industry, just like the suppliers understand. I sold a few earlier in the year and through that and dividends have recovered my initial investment, so expect I will be sitting on my holding for a great many years to come, through some upwards and downwards cycles. I'm more likely to add than reduce, barring some unforeseen circumstances.

I think most of the regular posters on this thread have been in for a few years, in <$1.00 and mostly substantially lower and then enjoying some juicy divvies along the way. But still leaving the company in a very healthy cash position. I haven't sold any (as relatively smaller holding), and like you long-term, more likely to add than sell - if the price is right. Not alot of other shining lights in the NZ market currently.

But could look at it one way...... at the $1.20 current share price values them at roughly $240m (coop circa 100m shares for 50%). Last year they made almost $190m net..........just let that sink in!!

Like I've said before, not convinced alot of their capital spend will generate further value/income. Hope I'm wrong!

I see this as a bit of a cycle/correction. Had some historically good/very good years recently and this is a bit of a downside, especially with macro economic conditions - consumer spending, inflation, interest rates etc.

While La Nina has bought difficulties for farmers in many areas in NZ, it has bought good rainfall/conditions to many farming areas in Australia - plentiful feed/grass and with good conditions their herds have grown. El Nino typically brings these areas drier conditions, so may see some liquation and lower numbers in the future. Especially in lamb, the Australians are out there selling at any old level, and really bringing down prices. Plus they now have a FTA with the UK, so are heavily into there, where NZ didn't have such competition in the past. Beef will most likely be more positive going forward, and that is where most of the profit comes from.

When it comes to profit, last years record net profit of $189m was about 5.8% of turnover. The year before was $104m/3.8% (with turnover $500m less than 2022). So the margins are relatively slim. Doesn't take much to slip back into the red if markets take a dive, can't adjust livestock pricing fast enough, holding too much stock etc etc. Hate to think what has happened to their electricity, insurance costs in the last year, plus inflation in other areas. Any profit could be 'margin of error' stuff.

But I've also said, I'm glass half-empty. Also to be fair, could be said SFF have surprised on the upside in recent years.

[percy]

Fact of the Day: In the next 40-years, farmers will have to produce as much food as we have consumed in the past 8,000 years. - Material World,

Ed Conway

[Sideshow Bob]

Fact of the Day: In the next 40-years, farmers will have to produce as much food as we have consumed in the past 8,000 years. - Material World,

Ed Conway

Another fact for the day:

NZ has around 10m beef/dairy cattle.

Brazil, India and USA have around 660m cattle combined.......

[Sideshow Bob]

Last trade $1.12. Few more on the offer at $1.12 and bid at $1.06.

[iceman]

A bit of detail on the beef market in Simon Limmer's newsletter this week:

"Global Beef Markets Insights

In this week’s market report, we’re bringing you a little more detail on some of the longer-term trends for our key beef markets, and in particular, the United States and China.

Earlier this year, the US herd was 89 million head (the lowest since 2014) and the beef cow herd was 29 million head (the lowest since 1964). Drought conditions have improved in some areas, but not all.

US beef production has remained higher than expected in the first half of the year. In turn, this has kept US exports higher and led to a revision in 2023 forecasts. The effect of this in the short term has been reduced demand in the global economy relative to expectations, and lower prices than could have been expected.

In the longer term, we expect high cow slaughter means that the US herd will continue to shrink, lengthening any future rebuilding and limiting US production for the next several years with positive ramifications for our own beef exports.

China is an important market which provides stability to global beef pricing due to the sheer volume of beef consumed. Total beef consumption for 2023 is forecast to be 10.98 million tonnes, with 2.8 million tonnes of that imported.

Chinese beef demand has been slower to develop than previously thought, a function of current slower economic growth. Oversupply and heavy inventory has slowed demand and disrupted global pricing.

However, Chinese customers have started to re-enter the market, which has helped to firm up frozen cut pricing. Chilled demand is stronger than frozen.

Given the volumes of beef that China consumes, their in-market recovery is quite important. If the Chinese market doesn’t recover sufficiently, the US market will end up absorbing greater volumes of beef diverted out of South America, Australia and New Zealand.


In terms of production from competing exporting countries, production in the US, Argentina, Canada and Uruguay is expected to be down. On the other hand, we’re expecting increases in production from the likes of Brazil and Australia.

In Australia, beef production is forecast to reach 2.2 million tonnes (carcass weight) in 2023 - this represents a 15 percent increase on 2022 production totals. Cattle numbers for slaughter will continue to increase after the rebuild through 2020-22, and total production and exports will rise.

In the year to August 2023, Australian beef exports have already increased 62 percent to the United States, 30 percent to China and 16 percent to South Korea. "

[percy]

https://www.waikatotimes.co.nz/a/business/350083874/silver-fern-farms-adds-carbon-footprint-information-red-meat-packaging#:~:text=A%20breakdown%20of%20the%20carbo n,and%20the%20recycling%20of%20packaging.

[blackcap]

https://www.waikatotimes.co.nz/a/business/350083874/silver-fern-farms-adds-carbon-footprint-information-red-meat-packaging#:~:text=A%20breakdown%20of%20the%20carbo n,and%20the%20recycling%20of%20packaging.

It is rather disappointing to see Silver Fern Farms give in to this nonsense.

Playing along will only appease for so long but in the end you will be devoured.

They should push back against a cult that is trying to extinguish their existence.

[iceman]

It is rather disappointing to see Silver Fern Farms give in to this nonsense.

Playing along will only appease for so long but in the end you will be devoured.

They should push back against a cult that is trying to extinguish their existence.

Like this neighbour of mine at an Oklahoma RV park last night, proudly displayed on his number plate :-)

14771

14772

[Sideshow Bob]

SFF's 75th Birthday on Saturday. Few ups & downs in that time.

[iceman]

Last trade $1.12. Few more on the offer at $1.12 and bid at $1.06.

Has creeped up a little in the last week. Fairly firm support at $ 1.30 now. Managed to get a handful at $ 1.15

[percy]

Has creeped up a little in the last week. Fairly firm support at $ 1.30 now. Managed to get a handful at $ 1.15

Good on you.

[Sideshow Bob]

Has creeped up a little in the last week. Fairly firm support at $ 1.30 now. Managed to get a handful at $ 1.15

Nice one! Great LT buy, and see now popped back up.

Has been reported that Alliance has said at their supplier roadshows that they'll make a loss this year (FY ended 30/9/23). 2021 they made $23m after tax, last year $73m. So quite the turnaround and will be interesting to see how far down they are. Understand taking quite a few measures to arrest the slump, including some job losses, and rumours are might be quite a large red number.

Alliance more exposed to lamb than SFF, as AGL are NZ's largest sheepmeats processor. Lamb has been a huge struggle for processors of late, with markets awash with cheap Australian lamb. Australian schedules are around $5 AUD/Kg for heavy lambs, $3.75/Kg for light lambs, whereas NZ lamb schedules are around or just under $7 NZD/Kg - so something doesn't add up. For the last week in September, 2021 the Aussies slaughtered 97k lambs, 2022 was 87k lambs and in 2023 it was 125k lamb......

Australia has benefited from herd rebuilds and La Nina being kind to Aussies with good rain/grass growth. But El Nino could be a complete different story.

Understand beef has been pretty average margin-wise, but better than lamb but Alliance only about 7% of NZ's production vs SFF 30%.

Interesting times!!

[Sideshow Bob]

Potential job losses at Alliance....

https://www.stuff.co.nz/business/farming/132857157/staff-cuts-coming-at-meat-processor-alliance?cx_testId=37&cx_testVariant=cx_1&cx_artPos=1#cxrecs_s

While different to SFF, operate in the same procurement and sales markets.....

[iceman]

Bids & offers keep creeping up !

[Sideshow Bob]

Bids & offers keep creeping up !

$1.15 was a good top-up point!! :)

[Sideshow Bob]

Again, not SFF but Alliance.

https://www.odt.co.nz/rural-life/red-meat/%E2%80%98pretty-terrible-year%E2%80%99-meat-company

Preparing shareholders for a sh1t result.....

[Sideshow Bob]

Hmmmmm.....

https://www.farmersweekly.co.nz/opinion/meatworks-under-threat-from-land-use-change/

[Sideshow Bob]

I see Rob up for Chairperson of the Year and Simon up for CEO - well done!

https://www.nzherald.co.nz/business/new-zealand-business-finalists-named-for-2023-deloitte-top-200-awards/OSA27EQUD5BCDF3NSFGMHB64BQ/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Tuesday+31+ October+2023

[iceman]

I see Rob up for Chairperson of the Year and Simon up for CEO - well done!

https://www.nzherald.co.nz/business/new-zealand-business-finalists-named-for-2023-deloitte-top-200-awards/OSA27EQUD5BCDF3NSFGMHB64BQ/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Tuesday+31+ October+2023

Well done to them. Doesn't look like we'll be getting any interim divie this year, like we unusually did last year. They announced it last year on 28 October.
Not surprising really !

[Sideshow Bob]

Well done to them. Doesn't look like we'll be getting any interim divie this year, like we unusually did last year. They announced it last year on 28 October.
Not surprising really !

Surprised if anyone was surprised no interim divvy! I'd take last year as an outlier at this stage, but very welcome if wrong!

Last year Alliance was 17th of November announcement. Might see that a little later this year given loss coming, but will be an interesting read on the industry and where SFF might pitch up.....

[Sideshow Bob]

A Business Desk article this morning, saying Alliance will make the largest loss since 2012. I had to scour the internet to find their 2012 annual report - made $57m operating loss, $50m net loss, on $1.4B turnover. Last year they turned over $2.2B, although expect to be well back on this.

Talked to someone from another company recently, and even with issues with Gabrielle etc, they were still profitable, albeit not by much.

In the meantime, looking tough for farmers....

https://www.1news.co.nz/2023/11/06/20-plus-drop-in-lamb-prices-harder-and-faster-than-expected/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Tuesday+7+N ovember+2023

[winner69]

All these new regulations being imposed on farmers re emissions and such things apparently aren’t being driven by Greenpeace, Green Party and such bodies …….rather it’s a strong lobby group from producers influencing government action. That pisses the farmers off …drive us of our farms and we all lose

Probably true when you consider Silver Farms and their Net Zero stuff

[blackcap]

All these new regulations being imposed on farmers re emissions and such things apparently aren’t being driven by Greenpeace, Green Party and such bodies …….rather it’s a strong lobby group from producers influencing government action. That pisses the farmers off …drive us of our farms and we all lose

Probably true when you consider Silver Farms and their Net Zero stuff

Silver Fern Farms is an enabler and they are contributing to the problems farmers face. I despise them for their stance and subsequently have sold my shares. Nasty corporate in my humble opinion.

[Sideshow Bob]

All these new regulations being imposed on farmers re emissions and such things apparently aren’t being driven by Greenpeace, Green Party and such bodies …….rather it’s a strong lobby group from producers influencing government action. That pisses the farmers off …drive us of our farms and we all lose

Probably true when you consider Silver Farms and their Net Zero stuff

Where was this from W69?

[nztx]

Interesting comments in from Service providers, but won't elaborate further ..

[iceman]

Interesting comments in from Service providers, but won't elaborate further ..

So the point of this comment was what ?

[nztx]

So the point of this comment was what ?



Late to too late for Banks approving large outfit's seasonal financing sheets ? :)

[karen1]

Late to too late for Banks approving large outfit's seasonal financing sheets ? :)

Please NO! Not this thread too.

[Sideshow Bob]

14830
.............................

[nztx]

https://www.nzherald.co.nz/business/de-risk-from-china-companies-investors-warned/7GCDO4HO4ZEV5M4F3TRJMBJVUI/

De-risk from China: Companies and investors warned

[Sideshow Bob]

The meat guys in recent years have had little to no choice but to pile into China where able (in particular lamb).

China is where alot of the value has come from in recent years. Selling lamb flaps at huge prices, increasing volumes of forequarters and heavy legs, then items such as bones, fat caps etc where would have gone to petfood or MDM. Diversifying out of more traditional markets UK/EU/US/ME markets and tightening supply (and pricing).

To be competitive for procurement, are you going to take $13/Kg for lamb flaps in China, or $5/Kg somewhere else (if that)?

Live by the sword, die by the sword.......they all had a great year last year, but this year with economic factors, dynamics of protein markets, China slowdown and a plethora of Australian lamb it is much, much tougher.

Australia have built up huge numbers over the last few years and they just keep keeping and shipping regardless of price. Bit of El Nino required to dry them out and normalise their numbers. Until that happens, going to be a hard road on lamb at least.....

https://www.mla.com.au/news-and-events/industry-news/lamb-exports-highest-on-record/

But if anyone is sensible, you don't bet the house on China and keep all irons in the fire......

[iceman]

Well said SB

[nztx]

Interesting article on Alliance in Stuff today:

https://www.stuff.co.nz/business/farming/133265723/alliance-group-backtracks-on-delayed-advance-payment-to-farmers


“Like all New Zealand meat processors, Alliance is facing significant volatility as a result of geopolitical tensions, inflationary pressures and weakening global markets. This has flowed through to weaker livestock pricing for our farmers.”


Richard McIntyre, from Federated Farmers, says many farmers are struggling to make a profit as a result of higher on-farm costs and China’s economic slowdown. Climate change policy and other new regulations are also adding to their administrative burden.

[percy]

Looks as though next year US market will be strong for SFF.
https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/Pg3eJUfziGnPDl4Kha417w/F9G08mr57XvbaruABbGDKQ

[iceman]

Yes hopefully prices will start rising again late next year if Aussie and Brazil reduce their dumping into USA. This from Simon Limmer's latest newsletter:

"The glut of product out of Australia continues, with huge volumes going into the US and China.

Though this has placed immense pressure on pricing for us, US domestic retailers are holding onto very strong prices. While reflected in US domestic cattle pricing, it’s not being passed through to imported prices due to the strong volumes of imported beef available. South American product going into bond, particularly from Brazil, is adding negatively to market sentiment with 60,000mt of ‘other countries’ quota for clearance from January 1st. "

[percy]

More on the Australian Meat sector.
https://sharecafe.us14.list-manage.com/track/click?u=c2c1464dc7900c4f66c3a574d&id=cf270a5906&e=338561e893

[Sideshow Bob]

SFF update pricing.....

SFF takes a hard look at forecast prices as lamb prices dwindle (farmersweekly.co.nz) (https://www.farmersweekly.co.nz/markets/sff-takes-a-hard-look-at-forecast-prices-as-lamb-prices-dwindle/?fbclid=IwAR2_hk3AyhVgr6djNL8_VWLWXe-OUmt7SLyj6eSPa84wlbcF876HRFJBi4I)

[Southern Lad]

Alliance Group Ltd result released late yesterday not too flash - Alliance Group announces Annual Result | Alliance Group (https://www.alliance.co.nz/news/2023/11/alliance-group-announces-annual-result/)

[nztx]

Alliance Group Ltd result released late yesterday not too flash - Alliance Group announces Annual Result | Alliance Group (https://www.alliance.co.nz/news/2023/11/alliance-group-announces-annual-result/)


Indeed quite a turn around.

Some old Sheds from the past I recognise among their collection of plants, not small ones either..

What is depicted at the top of P41 of the AR could really come home to roost if 2024 betters the 2023 race into Red

"Half-Assed Stops Here" Very Appropriate, but probably applies as warning to more in the game ;)

Signals of new market reality will be coming home fast to the Cockies firing their stock through these outfits as the 'hand that feeds' encounters market headwinds on many fronts .. God help any of the outfits needing a stakeholder prop up or bail out looking forward ..

[Sideshow Bob]

From one record year to another......:mellow:

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.

[Sideshow Bob]

David Surveyor obviously timed his exit stage left perfectly on the back of a record (good) year.

I see Select Harvests aren't going that well either. For the HY to 31/3 they lost $96m AUD - although he'd hardly got his feet under the desk by then.

Must be going to report again fairly soon for the full year......

[Sideshow Bob]

Alliance back to profit.....(paywalled).

Foresee slimmer margins and no inventory write-downs like last year.

https://businessdesk.co.nz/article/finance/alliance-will-absolutely-get-back-to-profitability-this-year-chair-says?utm_source=7am+Headlines+from+BusinessDesk&utm_campaign=795396344b-7am+Headlines&utm_medium=email&utm_term=0_617c2ef34a-795396344b-402467359

[nztx]

Alliance back to profit.....(paywalled).

Foresee slimmer margins and no inventory write-downs like last year.

https://businessdesk.co.nz/article/finance/alliance-will-absolutely-get-back-to-profitability-this-year-chair-says?utm_source=7am+Headlines+from+BusinessDesk&utm_campaign=795396344b-7am+Headlines&utm_medium=email&utm_term=0_617c2ef34a-795396344b-402467359


"absolutely believes ... will .. headwinds .." ;)

nice words, but there's a 50% increase in Interest bearing debt put on the Tab for 2023
adventures, which will probably be having to be repaid first & usary cost spat out with no
further calamities needed in the ensuing year of forecast head winds ..

Is he talking it up in time for a CR - perhaps to retain some of the Cockies hard-earned before times up ? :)

or would that cause wider bouts of indigestion to the already suffering ?

[winner69]

From Farmers Weekly interesting report

My mate Cameron Bagrie says …

There are risks this gets worse for numerous reasons. Firstly trade in security is now a key theme for food, energy and technology. Second, populism is driving a lot of policy. Third, globalization is facing a backlash. Fourth, inflation is wrecking havoc across countries..




Global ag subsidies off the charts
https://www.farmersweekly.co.nz/markets/global-ag-subsidies-off-the-charts/

[Sideshow Bob]

https://www.farmersweekly.co.nz/markets/sff-warns-lamb-may-have-further-to-fall/

Interesting times.

$70m into plants. Is that going to produce a return or just to keep them going??

11/12ths of the way through the year and no guidance (no real difference to any other year, except last year with a surprise divvy).

They had inventory of $276m at the end of last FY, so based on the Alliance result would have to expect a chunk of that lamb value is written off, as well as probably paying too much through the year.

However I looked at the SFF market report from the end of September and the price graphs, and much of the drop in markets was between October & December last year, so hopefully are in a better place than Alliance if their inventory values were aligned to market values as at 31/12.

14873

Have to pontificate and speculation in the meantime, but when the tide goes out, we see who is swimming naked.......:mellow:

[nztx]

https://www.farmersweekly.co.nz/markets/sff-warns-lamb-may-have-further-to-fall/

Interesting times.

$70m into plants. Is that going to produce a return or just to keep them going??

11/12ths of the way through the year and no guidance (no real difference to any other year, except last year with a surprise divvy).

They had inventory of $276m at the end of last FY, so based on the Alliance result would have to expect a chunk of that lamb value is written off, as well as probably paying too much through the year.

However I looked at the SFF market report from the end of September and the price graphs, and much of the drop in markets was between October & December last year, so hopefully are in a better place than Alliance if their inventory values were aligned to market values as at 31/12.

14873

Have to pontificate and speculation in the meantime, but when the tide goes out, we see who is swimming naked.......:mellow:



Good post .. any guesses on whether the Life Boats will be put on alert & who will be doing the honours ? :)

[Sideshow Bob]

I think others shouldn't need the life boats, and would have to think being more beef centric, then ANZCO & SFF are better placed to post a better result given this and timing on the lamb market downturn vs FY end.

Here is an interesting article:

https://www.farmersweekly.co.nz/opinion/alliance-is-optimistic-but-i-have-questions/

Pretty upbeat from the chairman of a company that's just lost the thick end of $100m (although I suppose he has to be).

This was an interesting comment:

He also looked rather wistfully at the timing effect of the September year end compared to the competitors’ financial year coinciding with the calendar year, enabling them to report the downturn in the last quarter of an otherwise very profitable financial year

AGL's FY is timed for the lowest point of their seasonal activity, when operations is at a low ebb, stocks are usually pretty low, and maximum cash is back in the bank. So typically it has made it look as good as possible?? They've had the same market conditions as everyone else?? By that thought process, then they should have performed even better last year??

I think Allan Barbers questions are very pertinent......

While conditions are much tougher this year, and no doubt SFF result won't be anywhere near last year, I'm a little more positive than what I had been - as much of the downturn in market values should be accounted for.

[nztx]

The Aussie sheepmeat market glut is reported as being expected to continue into 2023/24 - probably a major
factor in the way our own sector is faring in global markets, keeping the lid on performance in foreign markets
where Auz is one of our competitors..

[percy]

From Silver Fern Farms CEO's latest fortnight report.

Beef


Little has changed in any market, with volumes continuing to shift but at lower prices.



Tropical Cyclone Jasper is moving towards the East Coast of Australia, and while the category 4 system is expected to weaken when it hits land it will likely bring heavy rain, on top of significant rainfall already seen in parts of the country. Australian processing numbers remain high, but more water and greater feed availability could see a pullback in volumes, with procurement prices already lifting and forward bookings not as strong as they were.



For similar reasons the NZ beef kill has been slower to start, however these reduced volumes haven’t really made an impact in global markets that have high product availability.



The US kill continues at high numbers for longer than initially forecast. Consequently there’s no real pressure for domestic processors in the US to chase prices higher, with good availability of imported and domestic production.



In China a broader range of cuts are back in demand, albeit at weaker prices relative to the first half of 2023. Chilled demand remains firm, with increasing weekly chilled shipments as prime volumes have lifted.



In the Middle East, South East Asia and Japan, prices for chilled beef have remained stable. Reliable supply, consistent quality, and a close relationship with our in-market customers have all been important.



Sheepmeats


Markets remain temperamental.



We are experiencing price stability in China for primal cuts though secondary items continue to decline in price. This raises the question of whether the bottom of this market been found, or if is this a temporary reprieve.



Recent reports from South American producers supplying into China advise of a period of sustained pricing followed by further downside with volatility ensuing. Recent rain in Australia and an increase to livestock pricing may also be contributing to this recent price stability.



We are seeing some ‘green shoots’ in Europe now that pricing is at a level where retailers are prepared to once again promote lamb. Retailers have been slow to pass savings on to consumers choosing to bank good margins rather than push through additional volumes, however once one retailer breaks the mould generally the rest follow, and demand increases as a result.



Production toward Easter trade commences as plants start back in the New Year. Demand is down marginally on the previous year however with retailers keen to promote, and pricing at favorable levels, our customers are confident of a successful Easter sales period in 2024.



Mutton markets also appear to have settled for now, with pricing holding; no improvement but no further falls either. The exception is that heavier mutton continues to carry less appeal globally, and options for these carcases continue to reduce along with pricing.



Venison


The venison environment remains stable on price though demand is subdued as is traditionally the case at this time of the season.



EU customers continue to ‘sit out’ as they concentrate on servicing their Game Season trade.



The venison market in China continues to function at normal levels with prices holding for the most part and demand remaining stable across their full range of products. We have had some good recent success expanding on this range and continue to make inroads with regards to increased volumes.



We continue to work with North American processors around their manufacturing requirements for 2024. Interest has been positive and we are looking to continue to build on the good work done here over the previous 12-18 months.

[DarkHorse]

Has anyone had a stab at calculating earnings and/or cashflow for the coming year or two?

[percy]

Has anyone had a stab at calculating earnings and/or cashflow for the coming year or two?

I would like to think SFF Ltd will make a profit as the price of their major product Beef has not fallen as much as Lamb.
This year their capex will have remained high,a lot of it spent on IT.
A modest profit would be welcome.
Dividend.The CoOp ,that we are shareholders, could decide to pay a divie using some of their rainy reserves.
Note.It is raining heavily at present here in Christchurch..lol
Pity we have to wait until the end of March or beginning of April for the result.
Current share price indicates to me "the market" is expecting a poor result with no,or a very small divie.

[Sideshow Bob]

Has anyone had a stab at calculating earnings and/or cashflow for the coming year or two?

I personally think too difficult to estimate.....with no guidance, no trading updates to the USX, no half year result, it makes any forecast reasonably meaningless. Could make some sort of judgement call given Alliance figures available, but don't think its worth it.

They are not at a stage where they are predictable, still the majority of revenue commodity driven and too much reliance on the macro environment/factors outside their control - ie weather, FX, other producing countries, alternate proteins, trade barriers etc.

There is also little publicly available profitability info from competitors - only Alliance and ANZCO, which have the same year end as SFF so comes out at a similar time. We've seen Alliance come out with a shocker, so sets the tone for the others.

Interesting the share price has slowly slid away - $1.15 essentially says the 'market' values the company at $230m, when it made $189.3m net last year.

Obviously not going to repeat this year, but the market holding low expectations....

If as Percy suggests they use a bit of their 'rainy day' funds as a dividend, just how much goes to 'shareholders' and how much to 'suppliers'.

[kiora]

SFF not my kind of investment BUT
Lush green fattening feed throughout the NI at the moment.
They may just have to bump the scheduals up if they want the stock

[percy]

SFF not my kind of investment BUT
Lush green fattening feed throughout the NI at the moment.
They may just have to bump the scheduals up if they want the stock

Demand is driven by SFF's customers.
At present that demand is being supplied by Australian and Brazilian suppliers flooding the markets with cheaper product.
Please read my post #840.

[Sideshow Bob]

Demand is driven by SFF's customers.
At present that demand is being supplied by Australian and Brazilian suppliers flooding the markets with cheaper product.
Please read my post #840.

Hopefully matching capacity with supply.

Typically their main margin period is through summer when there is peak demand for processing, maximum efficiencies, lesser competition for stock and schedule prices can be paired back.

And the old thing.......you can only kill'em once!!

[Sideshow Bob]

Dan Boulton confirmed as the new CEO.

[percy]

Dan Boulton confirmed as the new CEO.

I am very pleased with Dan's appointment.


Silver Fern Farms has today announced that Dan Boulton has been appointed to be the new Chief Executive of Silver Fern Farms. The appointment will take effect from February 2024.



Boulton is currently Silver Fern Farms’ Chief Supply Chain Officer, having been with the company for over six and a half years. Prior to this, he held roles in the seafood, horticulture and forestry industries.



Silver Fern Farms Co-Chair Rob Hewett says that the recruitment process was extensive and attracted a range of candidates.



“We are fortunate to have been able to consider many high-calibre candidates for the role, including some from overseas,” says Hewett.



“However, the Board felt that not only does Dan already have a breadth of understanding of the business, he is also the right person to lead the company through the current challenges in market and continue the company’s momentum,” he says.



Incoming Chief Executive Dan Boulton says he is excited about taking on the challenge of leading such a great New Zealand company, and despite the current market conditions, is optimistic about the opportunities ahead for Silver Fern Farms and its farmer partners.



“I know from my current role that all our partners across our supply chain are hurting at present. However, this is a moment in time, and I’m confident Silver Fern Farms’ focus on executing its strategy and managing cost will see the company and our partners recover strongly,” he says.



Simon Limmer will stay as Chief Executive through to early February when Boulton’s appointment begins.

[iceman]

Good to see a long serving internal appointment.

[DarkHorse]

Post deleted.

[Sideshow Bob]

https://www.abc.net.au/news/rural/2024-01-11/supermarket-lamb-prices-to-rise-sheep-saleyards-strong-start/103300910

Bit of a sharp rebound on prices in Oz, where alot of lamb is consumed within Australia. Supermarkets been caught out on their margins......(never happens here!!)

In the meantime, Aussie processing numbers are down with a bit of rain, but might make it challenging for exporters to compete with the domestic market. So from a kiwi perspective, might potentially be a little less Aussie lamb in export markets, as NZ production starts to head towards peak seasonal volumes.

[Sideshow Bob]

End of an era with Rob standing down, but presumably carries on as co-chair of SFF Ltd. Interesting Anna Nelson only been on the SFF Coop board since May last year!

Media Release: Silver Fern Farms Co-operative – Board Nominations Open & Changes to Governance
×Close
Summary
Nominations are now open for two Farmer-Elected positions on the Silver Fern Farms Co-operative Board. Current Farmer-Elected Directors Rob Hewett and Gabrielle Thompson will retire by rotation at Co-operative’s Annual Meeting on 8 May;
The Co-operative Board has unanimously voted Farmer-Elected Director Anna Nelson to become the new Chair following the Annual Meeting;
The Board has also unanimously voted current Chair Rob Hewett to stay on as an Appointed Director for up to 12 months to support continuity of governance. Retiring Director Gabrielle Thompson has advised she will be standing for re-election as a Farmer-Elected Director;
Nominations for the two Farmer-Elected positions will be open until 20 February at 12 noon. Voting will commence from 4 April and will remain open until 3PM on 1 May. Results of the election will be announced at the Annual Meeting.


Media Release
Silver Fern Farms Co-operative has today announced that nominations are open for two vacancies on the Board and has also confirmed that Anna Nelson will become the new Chair following the Co-operative’s Annual Meeting on 8 May.
Current Farmer-Elected Directors Rob Hewett and Gabrielle Thompson will retire by rotation at the Annual Meeting.
With Rob Hewett’s term as a Farmer-Elected Director coming to an end, the Co-operative Board has unanimously voted to appoint current Director Anna Nelson to be the new Chair, with Rob Hewett unanimously voted to stay on as an Appointed Director for a term of up to 12 months.
Retiring Director Gabrielle Thompson has advised she will be standing for re-election as a Farmer Elected Director.
Current Silver Fern Farms Co-operative Chair Rob Hewett says the changes are designed to create continuity as there is both a change of leadership at a governance level and the Operating Company will have a new Chief Executive.
“With the end of my term on the Board in May coinciding with Silver Fern Farms Ltd recently appointing Dan Boulton as new Chief Executive, the Board has determined that I stay on as an Appointed Director for a short period to help through the transition,” says Mr Hewett.
“While the new Chair and Chief Executive will each bring fresh perspectives and focus, ultimately, the Board is united behind Silver Fern Farm’s strategy and direction of travel and it’s important we keep momentum until the new changes are embedded.
“From our experience working with her around the Board table, the Board and I have a great deal of confidence that Anna will be an exceptional Chair. Despite the prevailing market conditions we’re experiencing, we’re going into the next period in good health and with a clear focus,” he says.
Incoming Chair Anna Nelson says she is looking forward to leading a unified Board and working closely with shareholders and suppliers through the current challenges in market.
“As a farmer as well a Director, I’m acutely aware of how market conditions are being felt right across our supply chain. This gives our Board a clear focus and resolve to continue creating value for the farmers the world needs," she says.
Notes for Editors:
Directors of Silver Fern Farms Co-operative are responsible for setting the Co-operative’s governance and strategic direction. Silver Fern Farms Co-operative owns 50% of Silver Fern Farms Limited (the Operating Company), in partnership with Shanghai Maling.
Nominations are open to candidates who are a current shareholder of the Co-operative and have supplied a minimum of 400 stock units to Silver Fern Farms for each of the last two years. Nomination forms must also be signed by two shareholders who meet the same criteria.
Nominations will be open until 12 noon on 20 February, 2024. Voting papers will be distributed on 4 April with voting open until 3PM on 1 May, 2024. Results will be announced at the Annual Meeting.
Those Directors of the Co-operative who have also been appointed to the Board of the Operating Company will be confirmed following the Annual Meeting.

[Sideshow Bob]

Somebody wanted out......about 25k through Friday/this morning at $1.06.

The joys of illiquid shares.....solid drop from $1.20.

[iceman]

Somebody wanted out......about 25k through Friday/this morning at $1.06.

The joys of illiquid shares.....solid drop from $1.20.

A new deck maybe :-)

[Sideshow Bob]

A new deck maybe :-)

Don't think there are any director/mgmt disclosures on the USX? In the Annual Reports but otherwise nothing.....

Nice buying opportunity. This (past) year is a completely different kettle of fish, but on last AR, PE of 1.1 and a gross dividend yield on 30.38%. :laugh::lol::laugh:

[Sideshow Bob]

https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/limmer-signs-off-from-sff

[blackcap]

https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/limmer-signs-off-from-sff

Thanks Sideshow Bob, I had already read the article in actual paper print when it got delivered to us on Tuesday morning. Thats the benefit of living in the country. We get rural news and Farmers Weekly delivered in the mailbox on Tusdays weekly. Some really interesting articles in there.

[Sideshow Bob]

Thanks Sideshow Bob, I had already read the article in actual paper print when it got delivered to us on Tuesday morning. Thats the benefit of living in the country. We get rural news and Farmers Weekly delivered in the mailbox on Tusdays weekly. Some really interesting articles in there.

Some good reads - not that I'm a farmer!! :laugh: Usually read the electronic version of FW when it comes out Friday arvo.

[Sideshow Bob]

The joys of illiquid shares……

Last sale through at $0.95. Someone wanted out in a hurry? No buyers?

Or maybe someone was expecting an Alliance-esque result coming up.

This year a much different year, but a trailing PE of circa 1!! :mellow:

[percy]

BIDS
Quantity Price MPID
13,000 0.9800
5,000 0.9600
10,000 0.9600
42,771 0.9500
1,776 0.9500
25,000 0.6500
OFFERS
Quantity Price MPID
26,630 1.0500
32,144 1.0500
32,229 1.0700
45,915 1.1000
12,357 1.1500
21,122 1.1500
37,117 1.1500
53,110 1.1500
7,177 1.2000
5,000 1.2400
TRADES
Quantity Executed Price Time
7,229 0.9500 13/03/2024, 12:11:12 PM
25,500 1.0200 13/03/2024, 10:49:02 AM
15,500 1.0500 12/03/2024, 10:33:09 AM
2,000 1.0500 12/03/2024, 10:29:45 AM
4,777 1.1000 07/03/2024, 14:17:51 PM
3,000 1.1000 07/03/2024, 14:17:51 PM
3,337 1.1200 05/03/2024, 15:25:07 PM
2,000 1.1200 05/03/2024, 12:12:05 PM
1,840 1.1000 05/03/2024, 12:12:05 PM
12,643 1.1500 01/03/2024, 09:51:21 AM

[iceman]

Obviously shaking out some edgy holders ahead of the FY report where we are not likely to see any dividends. But like SB says, we are seeing a better year for the industry this year and are already 1/4 of the way through it. Happy to continue to hold this one for the long term and be content with the wild swings in this industry. Very cheap at current price.

[Sideshow Bob]

I'm not sure how much better, but it is a different year.

Looking back, results announcements have usually been the very end of March. With Easter this year, picking result could be out on 28th of March.

Not too long to wait for our annual guide to performance, before we go back to our usual 12 month financial performance/result slumber.

[percy]

I'm not sure how much better, but it is a different year.

Looking back, results announcements have usually been the very end of March. With Easter this year, picking result could be out on 28th of March.

Not too long to wait for our annual guide to performance, before we go back to our usual 12 month financial performance/result slumber.

Going from their fortnightly newsletters, I notice the US imported beef price has remained above the 5 year average.
Therefore the result may not be as bad as we expect.

[Sideshow Bob]

Going from their fortnightly newsletters, I notice the US imported beef price has remained above the 5 year average.
Therefore the result may not be as bad as we expect.

I've been (pleasantly) surprised the last few years with the number they've printed.

Lets hope so again - albeit in different circumstances/markets. ;)

[Sideshow Bob]

Good article here

https://www.farmersweekly.co.nz/opinion/decade-of-peace-and-prosperity-for-red-meat-sector/

[iceman]

Good article here

https://www.farmersweekly.co.nz/opinion/decade-of-peace-and-prosperity-for-red-meat-sector/

Thanks for sharing SB. Good reading.

[percy]

Good article here

https://www.farmersweekly.co.nz/opinion/decade-of-peace-and-prosperity-for-red-meat-sector/

Great read.Thanks for sharing.

[nztx]

Good article here

https://www.farmersweekly.co.nz/opinion/decade-of-peace-and-prosperity-for-red-meat-sector/

Thanks Bob - Good Article - a good publication to read too

"it is a tough industry with narrow margins and large capital requirements." .. Dont I know this well :)

[Sideshow Bob]

Today the day for the Annual Result......???

[iceman]

Today the day for the Annual Result......???

I was hoping so but doesn't look like it :-(

[Sideshow Bob]

Nothing today. Every other year looks like end of March.

Would be pretty cynical to come out with a result late Thursday before Easter!!

Something to look forward to next week (hopefully!)

[percy]

Nothing today. Every other year looks like end of March.

Would be pretty cynical to come out with a result late Thursday before Easter!!

Something to look forward to next week (hopefully!)

I never gave up on the announcement until 6pm.
A long day..

[Sideshow Bob]

I never gave up on the announcement until 6pm.
A long day..

Dan's comment from the Market Report:

Next week we’ll announce our result for the 2023 financial year,and you’ll be sent those details when they’re released. It should come as nosurprise that last year was a tough one, in the markets and back onfarm.

Expectations have been set......

[Sideshow Bob]

Silver Fern Farms Limited result for the 12-months to 31 December 2023:


Revenue $2,780.8m (FY2022: $3,277.8m)
Earnings before interest, tax, depreciation and amortisation (EBITDA) including share of associate earnings $16.4m (FY2022: $301.3m)
Net loss before tax $36.4m (FY2022: Net profit before tax $262.6m)
Net loss after tax $24.4m (FY2022: Net profit after tax $189.3m)
Capital expenditure $106.8m (FY2022: $96.0m)
No dividend paid (FY2022 $76.9m)


Silver Fern Farms Co-operative result for the 12-months to 31 December 2023:



Net loss after tax $10.7m (FY2022: Net profit after tax $94.1m)
No dividend to be received based on FY2023 (FY2022: $38.45m)
No debt. Cash and short-term deposits of $35.6m (FY2022: $34.6m)
Total Shareholder Equity of $406.8m (FY2022 $438.4m)
Co-operative declares no dividend and patronage reward for shareholders (FY2022 $33.5m)
Closing share price at 28 March 2024 - $1.04

[Sideshow Bob]

Silver Fern Farms Annual Results 2023: Results reflect challenging market conditions


Note: the following information covers the results for two separate companies; Silver Fern Farms Co-operative Limited, and its investment, Silver Fern Farms Limited (the Operating Company). 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 and its investment, Silver Fern Farms Limited, have today released their Annual Results for the 2023 year.

Silver Fern Farms Limited has posted a $24.4 million loss after tax, with revenue decreasing $497 million on the previous year to $2.78 billion. Silver Fern Farms Co-operative has posted a $10.7 million loss after tax.

Silver Fern Farms Co-operative Chair, Rob Hewett says the financial results reflect a year of challenging market conditions which have impacted the whole supply chain.

“Depressed consumer confidence across our key markets has put pressure on our customers, the Operating Company, and ultimately, returns for our farmer suppliers,” he says.

“We also felt the impact of one-off events throughout the year, such as Cyclone Gabrielle which caused damage and disrupted operations at the Dargaville and Pacific (Hawke's Bay) processing sites for a number of weeks.

“Like all our partners in the supply chain, and in particular our farmer suppliers, the Operating Company continues to carefully manage costs and reprioritise large elements of their proposed spend until there is greater confidence in the market’s recovery,” he says.

After several years of strong performance and record returns to shareholders, Hewett says it is disappointing to not be in a position to distribute any dividends but is confident in the Operating Company’s ability to recover when market conditions become more favourable.

“The Board regularly reviews the strategy and is confident that Silver Fern Farms’ strategy and direction of travel is the right one. However, it’s critical the business continues to adjust to the market conditions we are currently facing,” he says.

“We still have a few macro levers working against us and it’s prudent we adjust accordingly. However, this is also a moment in time that will pass, and we need to strike the right balance of managing costs but also retaining capability in the Operating Company so they can continue the momentum built over the last few years.

“The business has still been able to invest over the past year, and this investment will support the business through the challenging year we have ahead, and accelerate when more favourable conditions return.

“Ultimately, through the recapitisation of Silver Fern Farms in 2016 and recent years of favourable performance, the Operating Company is in a better position to manage through the cyclical downturns of the red meat industry than it has been in the past,” he says.

-----------------
Silver Fern Farms Limited Chief Executive, Dan Boulton, says challenging market conditions were experienced across the course of the year and are expected to persist well into the current financial year.

“The fundamentals of the market conditions we are facing are well understood. Weakened market sentiment has been compounded by increased supply dynamics out of the likes of Australia and South America. This has added more volume to already high in-market inventory levels, and put downward pressure on pricing,” he says.

“While we are expecting a recovery in beef pricing in the shorter term due to increased demand out of the US, we are expecting that sheepmeats will take longer to recover. Venison returns have been less impacted overall, thanks in part to increased investment in new market opportunities over the last few years,” he says.

Boulton says that the change in market conditions has meant Silver Fern Farms has adjusted the pace of its planned investment and focused on reducing operating costs.

“We’ve made some difficult but necessary calls to slow the speed of our planned investment, and in particular, our technology and transformation investment. Some technology programmes that were in progress will be finished, however the timing of some larger projects has been deferred until our spending envelope increases,” he says.

“There has also been an ongoing focus on cost management and optimising our day-to-day operations. Non-critical spend and investment have been deferred, and the business is focused on prioritising the core aspects of the business, from operations, through our supply chain, and into market.

“We see the current market conditions we are facing as a cyclical adjustment which will improve in the mid-term. The direction and our ambition for the business has not diminished, however we will continue to adjust the pace of our implementation to ensure that we are fit and appropriately resourced,” he says.

Despite the broader challenges being experienced in the market, Boulton says the business remains committed to its market-led strategy.

“We continue to see evidence of our recent focus and investment playing out, and we haven’t lost confidence in our longer-term direction of travel. While it’s still a growing proportion of our business, we’ve seen that where we have invested in our brand, we have been able to retain value relative to decreasing commodity pricing,” he says.

“At a time when markets are generally depressed, we are nevertheless seeing more higher value customers and consumers connect with the Silver Fern Farms brand and the product our farmers are producing.

“In particular, we continue to see strong interest and engagement from our key customers in our Nature Positive programme of work. Demonstrating progress towards sustainability metrics is becoming the reality of doing business, and we are increasingly seeing confirmation this is a key competitive opportunity for our company and suppliers,” he says.

Boulton says despite the reduction in overall farmgate pricing relative to the previous year, Silver Fern Farms continues to layer more value above the weekly operating price by rewarding suppliers who are aligned with market signals.

“We’ve increased our programme premiums to farmers on beef and lamb supply, and created a new venison supply programme. Furthermore, suppliers are also benefitting from new value streams created through our Net Carbon Zero and NZ Farm Assurance Plus programmes,” he says.

“Global demand for sustainable protein continues to grow, and we believe Silver Fern Farms is in the best position to capture this through our focus and investment. In the last year, we’ve achieved record farmer shareholding, and record staff and customer engagement. These metrics speak to the alignment right across the business,” he says.

Boulton says the company has improved processing capacity after a few years of disruption, primarily due to labour shortages.

“We’ve improved our processing capacity for the current season thanks to recruitment and retention plans and around $70 million of investment into our site network which has improved reliability. This was particularly important leading into what many were forecasting to be a drier season impacted by El Niño,” he says.

“However, the reality is that feed levels have been good across large parts of the country, and the industry is experiencing lower than expected livestock flows. This has presented challenges to our operating efficiency through the first quarter of this year, and we’ll need to continue adjusting to meet what looks like another challenging year ahead,” he says.

[Sideshow Bob]

A few trades through this morning - down to $1.00

Interestingly, the result hasn't been posted on the USX - but has been traded in the meantime.....:confused:

[iceman]

This announcement is very slow to show up on the USX. I still can not see it there, nearly half an hour after receiving the email.

So we did not make the break even we were hoping for and no dividend as expected. A bit surprising on the negative side that supplying shareholders do not get any "patronage reward" either for the year.
As they indicate they will do, they need to now review all their investment decisions and HQ expenditure and focus on their core business, processing and selling meat.
The outlook is not as good as I was hoping for either, indicating a tough first quarter. Could well be 2025 before we see a material upside.

In to the bottom drawer they go.

[Sideshow Bob]

This announcement is very slow to show up on the USX. I still can not see it there, nearly half an hour after receiving the email.

So we did not make the break even we were hoping for and no dividend as expected. A bit surprising on the negative side that supplying shareholders do not get any "patronage reward" either for the year.
As they indicate they will do, they need to now review all their investment decisions and HQ expenditure and focus on their core business, processing and selling meat.
The outlook is not as good as I was hoping for either, indicating a tough first quarter. Could well be 2025 before we see a material upside.

In to the bottom drawer they go.

Showed up at 10.48am! Were they still on Easter hols, or maybe in a coma from eating too many Easter eggs??

Disappointing result, but not surprised. The comment at the end is the worry in terms of being 'another challenging year'. They have spent large amounts in capital investment over recent years, and this needs to deliver a return - so think prudent to reign spending in for the time being.

No surprise that no patronage reward. After making a loss it would be difficult to then throw a bone to farmers, while 'dry' shareholders get nothing (that old chesnut). But a positive comment was "we've achieved record famer shareholding'.

The interest now will be with Anzco, as their result is normally reported in about May. Also must heap a bit of pressure on Alliance - so SFF did about $120m better than them last year, and then about $50m this year. Hmmmmm.......

[percy]

Showed up at 10.48am! Were they still on Easter hols, or maybe in a coma from eating too many Easter eggs??

Disappointing result, but not surprised. The comment at the end is the worry in terms of being 'another challenging year'. They have spent large amounts in capital investment over recent years, and this needs to deliver a return - so think prudent to reign spending in for the time being.

No surprise that no patronage reward. After making a loss it would be difficult to then throw a bone to farmers, while 'dry' shareholders get nothing (that old chesnut). But a positive comment was "we've achieved record famer shareholding'.

The interest now will be with Anzco, as their result is normally reported in about May. Also must heap a bit of pressure on Alliance - so SFF did about $120m better than them last year, and then about $50m this year. Hmmmmm.......

Yes very much as expected.

[Sideshow Bob]

Few points from the Business Desk article on their result:

- If wasn't for the effects of Cyclone Gabrielle and the labour situation, may have been close to breakeven or even positive result.
- Focus on costs, operational efficiency and value optimization.
- Recruitment freeze since 2nd half of last year, with a few redundancies, but not alot.
- Current conditions see as a value challenge, not a demand challenge

[iceman]

The EU keeps topping themselves with idiocy https://newsroom.co.nz/2024/04/02/more-beef-with-the-eu/

[Sideshow Bob]

Not particularly SFF related, but general market for meat alternatives.....

https://www.stuff.co.nz/business/350239158/sunfed-plant-based-meat-business-shutting-down

[blackcap]

Not particularly SFF related, but general market for meat alternatives.....

https://www.stuff.co.nz/business/350239158/sunfed-plant-based-meat-business-shutting-down

It's great to see these plant based 'meats' fail. Nothing more damaging to the body than ultra processed rubbish.

These vegans and vegetarians do like their oxymorons.

Interesting too that they need to give their products meat names in order for them to be palatable and market them as such. There is no such thing in my book as a plant based or vegetarian sausage.

[Sideshow Bob]

It's great to see these plant based 'meats' fail. Nothing more damaging to the body than ultra processed rubbish.

These vegans and vegetarians do like their oxymorons.

Interesting too that they need to give their products meat names in order for them to be palatable and market them as such. There is no such thing in my book as a plant based or vegetarian sausage.

Not to mention oat/soy/almond/pea/rice/coconut 'Milk"

Rather should be called juices.....

[Sideshow Bob]

Another interesting FW article.

https://www.farmersweekly.co.nz/opinion/is-sffs-strategy-vision-or-pipe-dream/

[percy]

Thanks for posting the link.

[iceman]

There appears to be a significant support at 95c, so hopefully this is our low this cycle :mellow:

[Sideshow Bob]

Annual Report - https://prod-trade.usx.co.nz/api/file/6625ef3317fac4672eb5e3f2.pdf

[Sideshow Bob]

Robotics at Finegand

https://www.farmersweekly.co.nz/technology/one-giant-leap-for-robo-meatworks/

[iceman]

Robotics at Finegand

https://www.farmersweekly.co.nz/technology/one-giant-leap-for-robo-meatworks/

This is the sort of investment we want to see. Hopefully it goes smoothly for them.

[Sideshow Bob]

Alliance now raising more capital from their farmer shareholders - basically making more deductions from livestock payments to increase share capital, and increasing their share requirements. They were carrying over $170m of debt at the end of their last FY, which is at the low point of the season/activity and want to use Lender funding for seasonal working capital needs only.

The Board believes the proposed changes will:


Restore balance sheet strength
Meet lender requirements
Continue our drive to be New Zealand’s most efficient red meat processor
Enable the co-operative to pursue additional value capture opportunities
Ensure Alliance remains 100 per cent farmer-owned


Tough for farmers to have to pony up for more investment when many will be making a cash loss for the year and prices/markets are poor.

Will be a problem as some farmers may choose to send their stock elsewhere - I understand Alliance's schedules are trailing behind others so if farmers go elsewhere, makes plants more inefficient, become more uncompetitive etc.

Will be an interesting watch......