Chief executive Simon Limmer told shareholders at the company’s annual meeting that managing the business last year was like living on a knife edge, requiring almost hourly decision-making and that the full SFF Ltd board has not met in person for 18 months.
Despite tracking well into the second quarter of the new financial year, Limmer says supply chain issues and the continued threat from covid-19 was creating challenges despite strong demand for meat.
“We are shifting product and we are finding consumers want our product,” Limmer said.
“The attributes we know that make us relevant today are still relevant in the covid-19 world, perhaps even more so.”
He says shipping reliability has plummeted, with the measure of how likely a ship is sticking to schedule plummeting from the usual 75% to 35% currently, with 85% of ships off schedule by between three and seven days.
However, Limmer says there is much to be optimistic about, including predictions the global economy will grow, sustained demand for protein, the covid-19 vaccine roll-out and New Zealand’s reputation.
Branded SFF retail packs are expanding through China and are in 700 stores in the US and online retail sales grew in three months, which was initially expected to take three years.
Writing in the company’s annual report, Limmer forecasts global meat production to grow 1.4% this year driven by greater volumes of pork and chicken.
Beef production is forecast to grow 0.8%, led by 1% growth in the US as breeding cattle numbers which have stabilised, but Australian production will be back 14%.
Limmer says while Australian farmers are still rebuilding their herds after multiple years of drought, four beef plants have lost market access to China.
South American beef production has been impacted by plant restrictions preventing access to China due to covid-19.
In the year under review, SFF had a marked increase in stock supplied direct, which Limmer says saved about $600,000 in third party fees, a supply channel they want to reduce further.
He says the company’s market-led programmes continue to grow.
“In 2020 beef programmes grew by 17% and our lamb programme grew by 4% and is nearing 10% of our total lamb supply,” he said.
“Given the market conditions this was an excellent result.”
SFF Co-operative chair Richard Young told the annual meeting that supplier-shareholders provided 65% of stock in 2020, up from 54% in 2019.
The co-op also had an extra 174 new supplier shareholders, a base Young says they will use to reduce the involvement of third party traders.
In the annual report Young announced plans to standardise the share structure to reduce the annual $50,000 administration cost.
“There is a considerable cost in servicing the over 11,600 holders of rebate shares who have fewer than 1000 shares in their co-operative,” Young said.
He says just 370 of those shareholders supplied livestock in 2020.
SFF Co-op earlier announced a net profit before tax of $32.4 million for the year to December 31, 2020, no debt, $22.3m cash on hand and shareholder equity of $327m.
During the year under review SFF Ltd, the company’s trading arm, reported revenue of $2.5 billion ($2.6b in 2019), Ebitda of $125.7m ($124.3m), net profit before tax of $65.4m ($70.7m) and dividends paid of $26.5m ($1.7m).
The dividend represented 40% of SFF Ltd’s net profit after tax, which was evenly shared by the two shareholders, SFF Co-op and Shanghai Maling Aquarius.
Two Shanghai Maling appointees to the board of SFF Ltd, co-chair Guoxiang Wang and director Aidi Tang, retired and were replaced by Jian Wu as co-chair and Yan Juan Xu as a director.
