TWO of New Zealand’s largest meat processing companies have reported disappointing results for their financial years, ended September 30.

Large NZ beef and sheepmeat processor Silver Fern Farms posted a net operating loss for the year of $31.1 million, reversing its previous year's profit.

The Dunedin-based processor made a profit of $30.8m in 2011, website www.stuff.co.nz reported.

Silver Fern Farms said turnover for the year ended September 30 worsened slightly to $2.03 billion, compared to $2.1b for the equivalent 2011 period, and $1.8b the year before that.

Chairman Eoin Garden said despite an operational loss, the company's balance sheet was robust, with a 44 percent equity ratio at September 30, down from 59pc a year earlier.

Significant investments had been made in 2012 to underpin future growth, including new marketing initiatives of $8m and a $67m investment in a new plant at Te Aroha.

Lifting market compliance via information flow

In addition, Silver Fern Farms also made a significant investment of $4m in its FarmIQ program in 2012.

Now in year three of a seven-year program, FarmIQ was described as an ‘enabler’ for farmers to deliver the required product to meet the company’s marketing and sales plans.

The program would also allow farmers to identify opportunities on-farm to grow their productive capacity, thereby generating more value from within their own farming businesses, Mr Garden said.

He said it was important to highlight the commitment the company had made to forge ahead with a growth strategy, notwithstanding the latest poor 12-month financial performance.

In the 2012/13 financial year Silver Fern Farms planned to invest a further $22.6m into brand development and marketing initiatives to build brand equity, channel and market development, and FarmIQ.

Chief executive Keith Cooper said Silver Fern Farms' operating environment and outcomes beyond its control had hit the business.

"Climatically we went into the 2011/12 season with ideal pasture growing conditions which meant livestock were held longer on-farm. This resulted in markets being short of product versus historical supply patterns," Mr Cooper said.

"Off the back of this, we saw global prices for lamb in particular, escalate to unsustainable levels, which resulted in a sharp fall in demand, and which then led to a significant decline in value."

The market correction had been ‘reflected back to suppliers’. This in turn caused write-downs in inventory valuations throughout the financial year of about $25.6m.

Through this period, Silver Fern Farms had to manage business continuity – supplying to customers and operating processing assets. The company had to compete for livestock at unsustainable prices which further contributed to the problem.

Meanwhile, NZ’s largest sheep meat processor Alliance Group Ltd this week reported a bottom line loss of $50.8 million for its financial year, ended September 30.

This was after taking a $13.5m charge on the cost of shutting down its sheep and lamb processing chain at the Mataura plant in Southland.

The operating loss alone was $57m, compared with an operating profit of $20m in the 2011 year.