New Zealand meat processor Affco has posted an operating deficit before interest and tax of NZ$15.86m (US$11.57m), against an operating surplus before interest and tax of $4.14m in the corresponding period last year, with its export profitability hit by the strong New Zealand dollar.

Operating revenues reached $499.33m for the first half of the year to the end of March, up from $419.97m in the first six months of last year.

In a statement, chairman and CEO Sam Lewis Stuart Weston said: "While this deficit reflects the normal industry seasonality, it has been accentuated by the extremely difficult trading conditions this year. Livestock numbers and plant operational efficiencies are similar to the same period last season; however a number of non-reoccurring factors have contributed to the lower result."

Weston said that currency effects had had a major effect on profit through reduced market returns resulting from the strong NZ dollar. "Processors have been unable to pass on to farmers the full extent of lost revenue because of tight market conditions," he said.

Weston added that lamb markets had proven "extremely challenging" due to pricing pressure and the difficulty in selling the full range of product. While the beef market had been more stable in US dollar terms, the strong NZ dollar had again lowered returns to NZ exporters.

The company said it expected trading conditions to remain difficult for the remainder of the season, with the NZ dollar expected to remain strong.