Silver Fern Farms has forecast an improved debt-equity ratio by the end of this financial year, lifting it from an initial forecast of 41% to 50%.
In notes accompanying its unaudited accounts for the six months to February 28, the meat co-operative expected by year's end to have slashed interest-bearing debt to $165 million, down from $245 million last August and a forecast $194.5 million when it released its initial six-month result at the end of April.
Silver Fern Farms (SFF) attributed the stronger position to the $30 million cash settlement from PGG Wrightson received since balance date, following agreement after the rural servicing company last year failed to settle a partnership agreement with the meat co-operative.
The report also reveals the company repaid its SFF020 $50 million bond issue on March 15 as part of renewing its bank facilities for the next two years.
This means SFF has only $75 million in bonds on issue which mature in December 2010.
Project Rightsize, which aligned company processing capacity with stock numbers and resulted in the closure of several works, had meant a loss of market share, the report stated.
This was attributed to a move away from a production-based model linked to pasture growth patterns and processing the maximum number of livestock to being market-led and matching livestock with customer requirements.
"Plant provides a service to this value chain as opposed to being the driver of profits," it said.
Project Rightsize was also designed to rebrand and reposition the business, and the report said an example of the success of the strategy was the shift of stock supplied off the peak of the season to the shoulders and the growth of chilled meat sales from 20.5% in the year to April 2008 to 23.1% for the corresponding period this year.
The report also announced that Farm Brands Ltd, a joint venture between SFF and Modena Investments Ltd to purchase, process and market meal and tallow, would have sales of about $70 million this year.
SFF reported a $5.9 million loss for the six months to February 28 on turnover of $1 billion, compared with an $11 million profit on revenue of $884 million for the corresponding period a year earlier.
Earlier, chief executive Keith Cooper said last year's result was distorted by a high kill because of drought and land-use changes and that over a five-year period this result would be consistent with previous years' results.
The accounts reveal $2.4 million in net gains on the disposal of assets and $1.3 million in restructuring costs.
Higher inventories and trade receivable have increased the value of current assets from $516 million last year to $662 million this year, while reduced property, plant and equipment saw the value of non-current assets reduce from $327 million to $293 million.
