This compares to an operating profit of $30.8m in the previous year ended September 30.
Revenues fell to $2.2 billion from $2.5b.
Returns were hit by a “perfect storm’’ of sharp falls in the group’s end-markets for both sheepmeat and beef product during the first half of the year, lower industry-wide volumes, unseasonal livestock flows, and strengthening of the NZ currency through the year, chairman Rob Hewett said.
The group made gains in its value-add strategy and the ratio of product sold in chilled form, rather than frozen, he said. The market for livestock remained very competitive.
On top of the trading loss ,SFF also booked a one-off writedown through the profit and loss account, in line with international accounting requirements, to value the business in line with the price being paid by Chinese group Shanghai Maling for a half-share, compared to the historical book values.
After an income tax expense of $700,000, the bottom line loss for the year was $30.6m, compared with a 2015 profit of $24.9m.
The company also took a $7.3m writedown through reserves (reversing period asset revaluations), so that the total impairment charge was $30.3m.
Operating cash flow remained positive, but at $32.4m was well down on the $156.8m cash flow in 2015 and $91.5m in 2014.
The latest balance date ratio of equity to total assets was 60%, steady with a year earlier. Total assets fell to $541m from $627m, and shareholders’ equity to $324.4m from $368.4m.
Group net debt fell to $107.2m from $121m in 2015 and $288.6m in 2014. Interest costs of $14.8m were half the previous year’s level, Hewett said.
Many companies judge their earnings on the Ebitda measure (earnings before interest, tax, depreciation, and amortisation). The figure for SFF was $32.1m, down from $90.5m in 2015 and $68.5m the year before that.
The 50% investment ($267m in cash) by Shanghai Maling has been made since the September 30 balance date. It means that Shanghai Maling and the Silver Fern Farms co-operative entity each own half of the meat processing and exporting business.
This allowed the group to create a sustainable capital structure, chief executive Dean Hamilton said. It had been very disappointing to miss profitability goals for the year, but good progress had been made in operating areas such as growing the value-add business and improving health and safety performance.
Value-add sales (in NZ and overseas) had increased by 31% over a year-earlier.
In March last year, the Silver Fern Farms-branded retail range was launched in Germany, and is now stocked in more than 1000 stores.
The group was committed to investing in people and marketing to build an awareness of the brand and the premium grass-fed NZ beef, lamb, and venison, Hamilton said.
