https://www.odt.co.nz/rural-life/red...fying-year-sff
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Plenty of challenges out there in the macro-environment - but continue to go along well. Can see exporters and the primary sector being our saviours (much like through Covid) and will have to do plenty of heavy lifting, as can see the NZ economy going to hell in a handcart fairly fast (despite what Grant says). Currency starting to provide a good tail wind right now, and help to offset some of those inflationary domestic costs.
As a shareholder, would like to see more in the way of financial updates, rather than being above or below budget - without having a clue what budget is, which is meaningless. Appreciate a highly seasonal business but must be able to do something, rather than have to wait another 11 months for a meaningful picture on how they are going. Until then, have to look at snippets from shareholder updates, hypothise (speculate) from competitors results etc etc.
Share price shown some weakness in recent times, down 23% from ATH - going ex-div, having run hard & fast, China lockdowns, Fonterra's payout going back, shipping disruptions plus war, inflation, interest rates etc etc etc.
Still looking good long term, and continued weakness might provide more chances for entry. Should also be enticing for new suppliers or those wanting to ensure have full holding to match their livestock supply.
Last trade $1.35. Bid currently at $1.15
When is it time to back the track back up again??
https://www.farmersweekly.co.nz/reco...126ksLXj6Zhu3I
ANZCO profit. Likely similar profit margin to SFF, based on size/turnover, and also year-end December. Again heavily skewed to beef processing.
Seems to be finding a base around the $ 1.40 mark after going XD. I would be very happy if it settles there which is up 20c (17%) from start of year and up 60c (70%) excluding the big divie, in the last 12 months.
All indications are that we've had a strong start to the year despite the many big and ongoing challenges that remain and are likely to do so for a long time yet. These challenges have now sort of become more just routine business as usual. I'm hopeful we are in for another bumper year operationally. The current lower NZ$ will definitely be favourable for SFF and farmers..
From what I can see, no real change year-to-date in the combination of conditions that created the record 2021 profit - aside from Omicron and its effects on plant operations - costs but also cost efficincies of running at full steam. Most markets appear strong, albeit in the face of rampant inflation and rising interest rates. Biggest worry in my mind is the effects of lockdown in Shanghai and other pasts of China and how long this rolls on for. Typically January-April are the biggest volume months of the year, but this year the season has rolled on due to Covid - 1/3 through the year but more than 1/3 through their annual production.
Lower dollar would be huge, especially as they indicated they could well have further labour cost rises. Great for their beef business, as more USD orientated than other species.
We aren't going to get much more in the way of other company reporting until Blue Skies in about August/September - but they've already indicated what they've made YTD and what their forecast EBITDA is. Then Alliance in about November
Virtual Publication - Farmers Weekly
SFF Annual Meeting page 3 (Front page covering surge in lamb export values)
From NZ Herald article about Sanford's profit:
There were few current concerns about supply chain impacts, thanks in large part to its relationship with Kotahi - the Fonterra-Silver Fern Farms joint venture logistics company.
Sanford profit rebounds in first half, but no dividend - NZ Herald
This weeks Farmers Weekly - couple of interesting articles - Meat Company Profits Page 35, and Keith Woodford about the Future of Sheep, Page 36.
Virtual Publication - Farmers Weekly
SFF issuer profile has now been updated on USX.
Company Name:Silver Fern Farms Co-operative Limited
Security:Silver Fern Farms Ords
Code:SFF
ISIN:NZSFFE0001S5
Listing Date:01/10/2009
Number of Shares Issued:100,378,874
Market Capitalisation:140,530,424
Last Price:1.400
Last Financial Year EPS:0.5198
P/E Ratio:2.693
Last 12 Months Gross Dividend Yield:12.786%
Great to see SFF stand and Simon with Jacinda in NY on the TV news :)
Thanks for the link. Fantastic publicity for Silver Fern.
I don't hold atpit.
Are we seeing vast amounts of pride, hubris, and generalised w*nkspeak at odds with commercial success?
https://www.odt.co.nz/business/meat-...-creating-buzz
The SFF agm was held at the Distinction Hotel,and the afternoon tea was held at SFF head office which was unfinished on 11th May..
I thought both were fantastic.Really impressed with the modern interiors while the historic character was retained.
Thanks for the link GTM 3442.
I don’t think so. Times are changing and primary products producers have to change with the times to survive, whether in meat, fish or fruit.
I like what I’m seeing from SFF in this regard, well supporter by very healthy annual dividends.
A very happy holder with SFF being nearly 25% of my NZ shares portfolio. It certainly has been pleasing during the market volatility in the last few months, while SFF has continued to perform very well indeed :-)
SFF are trying to transition from a "meat" company to be seen as a "food" company, with a larger consumer focus. Times have certainly changed, but they needed to - and certianly the furtherest down this track of the larger competitors - ie Alliance, Affco, ANZCO.
They've long tried to engender pride in the brand/company. In the past, very few would come from elsewhere to work in the meat industry, or in Dunedin. Now they have talent coming from other industries - as with most of their exec team. Part of this is culture, brand and workplace.
However........IMO there absolutely does become a tipping-point. My understanding is that Head office numbers have expanded hugely - and have to question how much all of those add-value to the company, and cover their salary and then some. They are doing some good things, but can definitely get to a stage where they believe too much of your own PR and marketing dept spin (and sometimes HR dept), and this has been seen in the past in NZ in the meat industry, and in lots of other industries and companies.
The thing is, profits have been good/increasing so it increases such "hubris". I know a director of another meat company who said the SFF result last year was "good, not great". Other companies have been making very good/record profits, albeit limited public info. Eg Blue Skies was forecast to make $25m EBITDA for the current FY, ANZCO made their best profit for several years/ever and Alliance made a decent profit despite a few issues.
In short, everyone has made very good profits, at least in the least year or so. Procurement tension has eased signifcantly - and probably one of the big changes.
The question really is how much of SFF profits have been from their own performance or market/procurement conditions. SFF have about 30-33% of beef processing, and hear beef margins remain "super". The big difference from SFF of old is the lack of LT debt - and simply not having to make decisions driven by need for cashflow, short-term focus and can now fund initiatives - some will be good, no doubt some won't be so good....
Back to the "hubris" etc, the test will really comes when things swing the other way, and have a bad year or two. Then might get more "back to basics".
Thanks SB. Great post
Free for all farmers and shareholders. Looks like a pretty good programme.
Plate to Pasture Farmer Conference 2022 | Silver Fern Farms
farmerconferenceagenda-externallink.pdf (clickdimensions.com)
While not optimising plant throughputs, no pricing pressure on procurement and also takes pressure off coldstorage and shipping in the meantime.
Definitely issues with Omicron and sickness still out there. One beef plant in the lower North Island canned their night shift last week due to absentism/illness and even had no day shift for a couple of days.
Staffing issues slow cow kill - Markets - Beef and Sheep, Trends - Farmers Weekly
Carnage elsewhere - but SFF (and the USX) sail on almost unaffected. The lack of liquidity can be frustrating at times....
But SFF actually finished about 2% UP for the week.....:cool:
Disappointing for us,however good for Seeka,and others.
https://business.scoop.co.nz/2022/07...s/#more-224397
Virtual Publication - Farmers Weekly - Page 11
"SFF a solid vessel for choppy waters"
...........................
I asked SSF CoOp investor relations man why NZ Companies office stated there are 113,857,802 shares on issue,while their annual report states 100,379,000.
Here is the reply I received,
We are in the process of reducing the Companies Office number to 111,131,51
This number includes rebate shares that remain on issue. In the balance sheet they show as a current liability ($10.799m) – Members rebate shares. They are reported this way as the holders have the option to seek surrender of those shares at a fixed amount of $1 per share. They are eligible for dividends and patronage rewards.
The current split is:
Ordinary fully paid shares 99,321,983
Partly paid 1,056,891
Rebate 10,752,640
Back and better! (ruralnewsgroup.co.nz)
The comment about trading 20% above 5 year average is an interesting one.....
If take that as profit (which is what really counts), given break-even/losses in 2017/18, the "5 year average" is less than the last 3 years, and close to half of last years record result.
So it sounds positive on face-value, but perhaps isn't so much??
Still lament the lack of clear guidance through the year, and lack of half-year result. I believe would definitely benefit from more disclosure.
Record payout for Australian Co-Op....
WAMMCO to return record $8.4m bonus to producer members despite ‘tough’ year | Countryman
Someone is a cynic….
https://www.ruralnewsgroup.co.nz/rur...ruitful-change
The old Hound has never been a fan of SFF.
SFF have obviously enjoyed a purple patch in terms of profitability - and also benefiting from the lack of long-term debt.
While there might be planning for the next 100 years - who knows what that might bring. Even the next 10 years. Chinese look much more long-term than westerners however.
The profitability and reinvestment in the business has been very much needed. But wWhen start to look at it cumulatively, there has been enormous sums retained within the business. They've made $240m net over the last 3 years - and probably close to $200m of this has been retained in the business.
Every meat company in NZ has made very good/record results the last few years, with market and procurement conditions. As an example, BSM were expected to make around $25m EBITDA for the year ended June - and that is just one smaller plant.
The (unanswered) questions are whether SFF are performing better than the rest or keep performing better, how they will go as/when market conditions change, how well the retained profit that has been kept within the business has been invested, and how well those retained earnings will generate returns.
For that I've got no answer......:confused:
Finally a bit of price movement - in the right direction....
Been sitting at $1.62 since the start of the month. Last trade at $1.65.
Buy side looking very dry......only 39,400 at $1.80.
$1.70 cleaned out and buyer wants another 26k.
Major step in ambition to become coal-free by 2030
Less hot air? (ruralnewsgroup.co.nz)
Half the cost coming from the Government.
System makes transport more efficient | Otago Daily Times Online News (odt.co.nz)
A million kms per year! Even without the less emmissions, still a good news story as probably $4m saved and also stock spending less time on trucks.
A bit more trading turnover on firmer prices in the last few days. Looks like the annual topping up of shares by the suppliers making sure they get their patronage rewards for the year. Not surprising as they are likely to be quite substantial with the great market conditions we've had this year and the current low NZ$.
I'm certainly looking forward to the divie next year :-)
Yes, certainly a bit more activity of late - about double the average weekly turnover. All signs point to another strong result, with the financial year 75% through. Some of the markets are weaker in the short term, but longer term I think still look strong, and solid fundamentals. Dollar will be a tail-wind, especially into the US.
Still holding strong when most other shares are in choppier waters.
The biggest threat (to farming and then the meat/dairy industries) is still the government.
Meanwhile we are happy with our beautifully delicious grass fed meat :t_up:
https://www.bbc.com/news/business-63260645
Someone keen to get out yesterday at $1.50. Had been good volumes traded the last few weeks at $1.60+.
Buy side has dried up for the moment. The 599 at $1.06 might be a stretch too far though.....;)
Hopefully gets re-shaped and reformed at some stage in the near future with a change in gubbermint....
Completely ridiculous - and will have unintended consequence of less production in NZ, and replaced with less carbon efficient production elsewhere. But we'll all feel good, whilst looking at millions of acres of pine trees.
Crikey an interim divie.
https://usx.co.nz/uploads/paperclip/...pdf?1666900539
Sorry I forgot to include Iceman and Mrs Iceman on the lash tonight too!! I might have a few hazy's......and Mrs SSB will probably have a wine.
Love me a good dividend!! :cool:
Decent volume gone through so far today (138k) but still a seller there at $1.60. Buyers are getting 10.1cps next week, and then likely at least the same again in 6 months.
Interim divvy cost them $22m ($11m to the Coop, and same to Shanghai Maling). With Alliance indicating record turnover/profit, then SFF should also be improved. Even at the same profitability as last year, with the interim divvy they've still retained about $28m in the business. But if Alliance are better, then I would expect so should SFF, who have a much bigger share of beef processing.
There are definitely choppier waters ahead. China is looking pretty sick on the lamb job, and the zero Covid policy will continue to make this difficult. Global economies are looking shaky, and reduced consumer spend with higher interest rates, inflation, fuel etc. Freight rates haven't come down out of NZ compared to what has happened on other shipping routes (still at extortionate levels).
However at the same time, alot of producers of other proteins such as pork and poultry are struggling with significantly higher inputs - fuel, feed, electricity. The dollar is also taking the edge off some of the market weakness.
SFF BBQ Challenge on Seven Sharp.....
https://www.youtube.com/watch?v=YDvsALINkF0
Interesting points from the announcements:
"the operating company's better than expected performance gives us the opportunity to speed up this investments" (Capital, markets, consumers)
and
"the amount for patronage rewards have been provisioned and retained by the Co-Op"
Indicates things are rosy and we'll get a very healthy final dividend as well.
I'm on target to get all my investment back in dividends in the first 4 years and the SP up around x 2.5 at the same time. Certainly my best performer by far in that time.
Over 5% of the annual volume traded today. Seller at $1.60 cleaned out (wondered if didn't read his emails this morning).
Big jump on the offer to $1.72.
big turnover today of 380,833 shares.
Last 12 months 4,417,168
Going XD for our Christmas bonus today :-)
Will be 31.9cps in the last 12 months. At current price of $1.64, that's a 19.45% gross yield.
I think given they paid an interim divvy (1st time ever??), the amount of money sloshing around the company and others reporting better/record results (eg Alliance), then a good chance the full year could be better than last.
USX website says PE is 3.155
They've made $240m after-tax in the last 3 years, and maybe paid out something like 34cps imputed (including the current divvy), so about $34m from the Coop. Times that by 2 and then round it up to say $80m, so they've squirreled away say about $160m and then another boomer likely this year. Market is effectively valuing the company at $330m
My only concerns is how well the retained funds and capex is invested for a return.
Happy Dividend Day!! :t_up:
A great result for Alliance https://www.alliance.co.nz/news/2022...annual-result/
"New Zealand’s only 100 per cent farmer-owned major red meat co-operative Alliance Group today announced a record profit before provisions, distribution and tax of $117.2 million for the year ending 30 September 2022.
The profit result, which is a 186 per cent increase on the previous year, is based on a record turnover of $2.2 billion. The co-operative will be making an $11.3m profit distribution to its farmer shareholders, and in addition, a $10 million bonus share issue of one share per qualifying stock unit."
Good to see you back from the pub Iceman.....:p
Certainly a relatively solid result from Alliance, who have been lagging SFF in recent years and by some margin. Of late have been about 2/3 the turnover of SFF, with more exposure to lamb, less to beef. About a 5.3% margin.
Lamb processors have had a golden run, however looks like this is coming to a shuddering halt (Alliance are a bigger lamb processor than SFF). Alot of stock in China, and suffering from the zero-Covid policy where a higher proportion of lamb is consumed outside the home. The prices paid by the Chinese for flaps, forequarters and a few other bits and pieces are well above any other markets and amount to about half the carcase. Add to that global inflation, recession fears in Europe etc, and expect schedules to come back fairly fast. Perhaps David Surveyor (Alliance CEO) saw this and resigned on a high/record profit?? The SFF market report certainly has graphs of these products that are heading south fast.
One thing that has changed for lamb processors is the carcase market has gone overnight. Processors had been selling whole carcases into China at really good money, rather than deconstructing it and selling all of the pieces. That market has now gone. The industry has more slaughter capacity than boning capacity, so that will be a handbrake - and boning takes more labour that they don't have.
Back to SFF, end of FY22 might be a little tougher, but they could well crest the $3b+ turnover for the first time. If Alliance can make $117m EBITDA (still go for the highest number), then would expect SFF to be even more meatier than last year. Heavily reliant on beef margins with roughly 3x the beef of Alliance. Current FX levels are helping in the meantime.
Thanks for a good informative post SB
Attachment 14324
Source: SFF Market Report ex AgriHQ.
A strong pullback on market returns on grinding beef and a range of lamb cuts - even with the currency assisting the NZD returns.
Processors have had a purple patch with markets and "a rising tide lifts all boats" - as evidenced by what limited industry results are available publicly. The true test will be whether companies can maintain profitability at a good level regardless on market conditions.
This will be a test for SFF that the capital reinvested into the business pays off. The positive aspect is that SFF now compared to the old SFF has a much stronger balance sheet, from the 50% sale and also retained profits.
Government still trying to kill off one of the mainstays of the NZ economy. Would rather see a monoculture of pine trees, for which overseas owners use the carbon credits so they can keep polluting - to maintain their virtue signalling and political correctness.
Meanwhile promoting tourism, where long-haul air travel remains inherently unsustainable. But that's OK because no one "owns" those emissions.
https://www.farmersweekly.co.nz/govt...4v7KJj3_P2MHTw
The primary sector is chalking up a small victory after the government agreed to amend the Emissions Trading Scheme to recognise more classes of carbon-sequestering vegetation.
"A good year for meat but also an outlier"
https://www.farmersweekly.co.nz/a-go...VTJTQtT1Fn3QGk
Share price starting to recover after recent dividend.
None on the offer currently. 52 week volume has been heading steadily upwards - now 4.8m, I think at one stage was low 3m's.
Decent volume through today. Steady at $1.50.
Come on everyone https://meattheneed.org/
Latest forecast from SFF is lamb schedules to be in the $6.50 - 6.70 range for the 1st quarter of 2023 - large drop from this time last year - about $35-40/head less income for farmers.
End of financial year coming up - while would have to think most of the year would have been very positive, might dampen down the 2022 result with markets going down and value of stock instore.
Beef prices heading south also, and below this time last year - but it seems to be reported that might be a more temporary situation.
Attachment 14382
While nothing much showing on the offer, still relatively regular trading over the last few days at the $1.50 level.
Inching towards the 5m shares traded over the last 12 months. That means just under 5% of the company has been traded. Must be plenty of happy farmers/holders out there.
While markets finished the year on a downer, expect 2022 (YE 31/12) still to pump out a very very good result. Now just to wait.....:sleep:
Was quite a few parcels on the offer earlier in the day, but someone has just clean out them all at once. About 65k shares in total, all at $1.50.
Share price seems to be locked on $1.50 for about the last 6 weeks. Over that period, been about 60-odd trades and about 640k shares traded.
Still plenty on both the offer/bid.
Would have to think buyers will get a nice dividend feed in another few months.....:)