NEW ZEALAND: Richmond launches convenience meat products, defers issue
New Zealand's largest meat exporter, Richmond Ltd, has launched a range of frozen precooked convenience food under the "Bite Me" brand.
The range, which includes products such as lean beef burgers and meatballs, is targeted at younger consumers such as students and young families. The move is intended to reduce the company's exposure to international commodity prices and exchange rate volatility, as it currently exports some 95% of its meat.
CEO John Loughlin told Dow Jones he expects the new range to make quite a difference to the group's earnings in the medium to longer term.
"This is the start of our move into fast-moving consumer goods. One of the things we have observed about businesses in that area is the stability of earnings, and the reliability of earnings which are not influenced by seasonal factors," Loughlin said.
Although Richmond reported record net profits of NZ$20.6m (US$9.1m) in its last financial year, the company acknowledges that margins remain slim. A shift into added-value convenience products is expected to lift margins.
There appears to be a strong business case for the new line, which is a good production fit with the company's core business, which provides the raw materials. The meatballs, for example, are produced using meat left over from the production of steaks or boneless lamb leg. Moreover, Richmond can assemble the new products using its ingredients technology and manufacturing equipment.
Meanwhile, the group said today [Thursday] that it would not proceed with its planned issue of capital notes this financial year. The company had planned to issue NZ$50m in capital notes, but said that uncertainty over interest rates, a slump in the supply of livestock and in-house requirements changed internal priorities.
Richmond will report is half-year results for the six months to March on 30 May.
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