‘Bitter-sweet’ result, as Casino lodges record $26m pre-tax profit

Jon Condon, 05/11/2014

cassino-logoTHE producer-owned Northern Cooperative Meat Co at Casino has returned a record profit for its 2013-14 financial year, driven in part by high rates of slaughter due to the drought.

Shareholders in the export and domestic processing business were told at Monday’s annual general meeting that  the cooperative has posted a record before tax surplus of $25.9 million for the 2014 financial year.

The result contrasts sharply with an already strong result in the previous financial year, when a $3.9m surplus was recorded, and an $840,000 profit the year before that.

Most of Casino’s income is derived from service kill fees, and operators using the plant’s services were able to source a lot more cattle this year, pushing the facility close to its operating capacity during 2014.

The latest result provides a snapshot into the level of profitability being experienced across the Australian export processing industry over the past 12 months, driven by high export demand and prices and an abundance of relatively cheap cattle caused by drought.

Co-op chairman John Seccombe attributed the financial result to a number of factors including the drought-induced record turnoff of cattle and improved operational performance at the plant.

“This is a bitter-sweet result for the co‐operative as we know our producer members have received poor livestock prices over the period,” Mr Seccombe said.

“The upside is that it provides the business with the necessary capital to undertake business-improving investment for the benefit of future generations.”

Mr Seccombe said he understood the frustrations of some Co-op members in relation to poor vealer prices this year, however he rejected the notion it was as a result of the previous year’s Ramsey Meats acquisition (click here to view earlier article on that purchase) and the subsequent establishment of the Manning veal business. He said those businesses came to being for the purpose of asset utilisation on the plant’s veal floor and to ultimately support the local veal producer.

“The prices paid for livestock are a function of supply and demand. With a lack of re‐stockers and backgrounders operating especially out of the local market, it created an oversupply for processors” he said.

Mr Seccombe outlined to the Co‐operative members at the AGM the capital investment program for the coming year and the establishment of the Members Services Division which will provide improved communication and services to members.

The Board recommended the allocation of redeemable bonus shares to members following this year’s result plus a dividend. The recommendations were accepted by members at the AGM.

“We’re very proud of the result and the board is focused on ensuring the investment strategy is prudent and provides appropriate returns to the co‐operative, its members and the community as a whole.”

Casino continues to service a wide selection of service kill customers, both conventional beef/veal and Wagyu, involving up to twenty operators across the year.

Specialised Wagyu processing continues to be a significant part of the Casino business. Some Wagyu customers had grown their cattle turnover in the past year, but overall the trade in that segment was about the same. The plant’s Wagyu kill for up to six regular service kill customers currently represents about 10pc of weekly beef throughput of about 4000 head.

While Casino has become a specialist in Wagyu processing, Mr Stahl said it was a challenging segment, because different customers required different cutting lines for global export customers, and had different branding and packaging requirements.

Casino Co-op membership numbers vary little from year to year, and currently sit at around 1500 members, both cattle and pork, including about 1350 that could be regarded as ‘active’.

As a registered cooperative, the Northern Cooperative Meat Co has similar reporting obligations to a publicly-listed company and, unlike most other meat processors in Australia, is required to publicly disclose its end-of-year results.

Following the collapse of the South Burnett meatworks near Murgon 14 years ago, the plant is the only producer-owned beef processing cooperative remaining in operation in Australia.




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