TL;DR: ANZCO Foods reports a solid profit in a challenging year, outperforming industry peers with strategic investments and efficient management, despite global challenges and the significant impact of Mycoplasma bovis at its feedlot. Optimism remains high for market recovery.
Strong Annual Performance
Despite a tough year for the meat industry, ANZCO Foods stood out by posting a substantial profit in 2023, distancing itself from others in the sector that faced significant losses. The company ended the year with a profit of $60.9 million, even though this was a decline from the previous year’s record $147.7 million.
Comparison with Industry Peers
This performance contrasts sharply with losses reported by other leading companies, with Alliance Group and Silver Fern Farms losing $98 million and $36 million respectively. For both, the financial reversal exceeded $200 million compared to the previous financial year.
Key to Success
Peter Conley, ANZCO’s CEO, attributed this resilience to focused management of core business functions and strategic investments. Conley emphasised that maintaining a clear business model and efficient execution of strategies were crucial, supported strongly by Itoham Yonekyu Holdings, their sole shareholder.
Diversification and Investment
Significant contributions came from value-added products like beef patties for McDonald’s and the Angel Bay range. ANZCO also benefited from its diversification into healthcare products such as bio-tissues for medical applications, including wound dressings and heart valve replacements.
Global Operations and Challenges
Despite global uncertainties, ANZCO maintained a strong international presence, particularly in Japan, which is a major market for its exports. In 2023, ANZCO expanded its global footprint by opening an office in China, joining existing ones in Japan, Australia, North America, the United Kingdom, and Europe.
Unique Supply Chain Advantages
ANZCO’s unique position in the New Zealand market comes from its ability to rely on regular cattle supplies from its own feedlot, setting it apart from competitors.
Dealing with Mycoplasma Bovis
A major challenge of the year was managing the depopulation and cleaning of the Five Star Feedlot due to Mycoplasma bovis. This required extensive planning and cooperation with the Ministry for Primary Industries (MPI), leading to significant operational disruptions.
Financial Impact of Challenges
The company faced a $42 million operating cash deficit, partly due to extraordinary costs associated with the feedlot cleanup, which were, however, covered by the MPI’s M Bovis fund. Other factors contributing to the deficit included large purchases of value-added packaging and a substantial tax bill from the record profits of the previous year.
Market Outlook
Looking ahead, Conley is optimistic about the recovery of lamb markets, especially in high-return regions like the United States, UK, and Europe. He notes a gradual resumption of consumer spending on premium food products as markets rebound post-Covid, though recovery in China has been slower due to prolonged economic challenges.
Future Prospects
As the industry moves forward, ANZCO is focused on adapting to market conditions and continuing to leverage its diversified business model to navigate future challenges effectively. Conley remains hopeful about the future, expecting market conditions to improve as consumer behaviour normalises globally.
