Silver Ferm Farms

[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/bus...of%20packaging.

[blackcap]

https://www.waikatotimes.co.nz/a/bus...of%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 :-)

IMG_3399 (002).jpg

IMG_3398 (002).jpg

[Sideshow Bob]

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