Meatworks blames 'worldwide crash' for $7 million loss
ONE of the region's biggest employers Northern Co-operative Meat Company has reported a $7 million loss after tax following a tough 2017-18 financial year.
The loss was reported to NCMC shareholders at its recent annual general meeting and is down from a profit of $1.06 million for the previous financial year.
Chief executive officer Simon Stahl said the drought meant a delay in the rebuilding of the herd nationwide.
"It will make for tough processing conditions for another year or two providing the return of what we can call normal seasons," Mr Stahl said.
"We did forecast that there would be a tightening of supply for the financial year so that aspect of the business did meet our expectation however there were a couple of events that did impact the result."
But he said the biggest contributor to the loss was "the worldwide crash in demand and therefore value of hides".
Hide prices have slipped dramatically in 2018, in some categories falling below the industry's last major market slump in 2009.
"We've got a wet blue processing business which is the first stage of leather making and there is only a limited number of those facilities remaining in Australia.
"As part of the value add to our beef operation we process the hides into a wet blue.
"Four to five years ago hides were up around $70-80 per piece which made it very expensive to make items like shoes, so the manufactures around the world started to substitute for petroleum-based shoes and footwear as a cheaper alternative."
But he said "at the same time beef processing globally has increased because of the demand for protein in developing countries".
In July last year China issued a temporary suspension on beef imports from several Australian meat processors including NCMC due to labelling issues.
Ms Stahl the five month market lock-out came as a result of the company not meeting some of the import protocols.
"It's certainly our responsibility to make sure the protocols are correct when we export.
"Since that incident we've been reinstated with export status to China but more importantly we've improved our monitoring systems and production systems.
"We opened an office in China to better build confidence in the market in terms of import protocols and language and cultural barriers."
He said while it was still early days the international office was proving very promising.
"Given the tough business conditions at present and in the previous year new capital expenditure is on hold for the time being."