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Alliance Ends Speculation over Mergers

18 December 2014

NEW ZEALAND - New Zealand meat processing co-operative, the Alliance Group has rules out the possibility of a merger with other major co-ops.

There has been speculation in the media and through analysts that a merger with another large meat producer could be on the cards.

However, speaking at the annual meeting in Gore, Murray Taggart, chair of Alliance Group (pictured) said that the negative sentiment and preoccupation with mergers from some quarters was disappointing.

“Our view on industry reform remains consistent. We will never chase scale at all costs and will only consider commercially-viable solutions which benefit our shareholders.

“The declining milk pay-out demonstrates that even the world’s largest dairy exporter, with all its scale, cannot swim against the tide of world markets.”

He said that the Alliance Group is focused on strengthening its position as New Zealand’s leading red meat processor and exporter.

Mr Taggart said it was encouraging the co-operative recorded an improved operating profit and resumed pool distributions to shareholder suppliers.

“The balance sheet remains strong and operating cash flow is positive despite ongoing challenges in some markets such as casings and pelts.

“The strength of the Chinese market has been an important factor in driving improved international prices.

“Traditional markets in UK and North America are also showing signs of recovery while there is potential in emerging markets.”

Alliance Group was well-placed to benefit from global retailers’ focus on the integrity of their supply chains, said Mr Taggart.

“There is growing recognition that our Pure South-branded product signifies high quality, reliability and safety. These traits, combined with improved shelf life and packaging, provide a provenance story our customers increasingly value.”

Generally favourable climatic conditions saw improved lambing percentages and higher carcase weights, however continuing land use change meant an increased mutton kill.

“This poses challenges for future processing volumes and that’s why we are focused on achieving operational efficiencies at our plants,” said Mr Taggart.

“The demolition of our Mataura sheepmeat facilities and the first full year of operations for the new rendering plant at Lorneville reflect this commitment. Both projects have delivered significant overhead savings for the company and the new rendering plant operates with a significantly lower environmental footprint.”

It had been a positive year for the sheep and beef sector with stock performance up and prices at historically high levels.

“Alliance Group leads the industry in market development and product improvement, our profitability is improving, we have a strong balance sheet and we see significant opportunities to lift returns for sheep and beef farmers,” said Mr Taggart.

TheMeatSite News Desk

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