17 Jan 2017

Silver Fern Farms payout 'used as a sweetener'

7:32 pm on 17 January 2017

Silver Fern Farms' dividend of 30 cents per share will be a one-off because it was only used to sweeten a deal with a Chinese company, according to one shareholder.

The company is New Zealand's largest meat company and has confirmed today it will pay $35.5 million in dividends to its shareholders on 14 February.

Silver Fern Farms CEO Dean Hamilton and board chair Rob Hewett at a special shareholders' meeting in Dunedin on 12 August 2016.

Silver Fern Farms CEO Dean Hamilton and board chair Rob Hewett at a special shareholders' meeting in Dunedin on 12 August 2016. Photo: RNZ / Ian Telfer

The government approved the controversial $260 million deal with Chinese company Shanghai Maling last year after a group of shareholders fought for more than a year to keep the meat company in New Zealand ownership, arguing the original shareholder approval of the joint venture was unlawful.

Shareholder Allan Richardson, who is a sheep and beef farmer from Heriot, said the dividend was used to get farmers on board.

"I believe it was used as a sweetener to get the Shanghai Maling deal over the line with shareholders. You can understand why because many of them have never had a dividend payout from Silver Fern Farms - they took this as though it's going to be the only one.

"I very much doubt there will be another dividend payout with the current ownership."

Mr Richardson said the payment was timely for farmers struggling with low meat prices, particularly sheep farmers.

"It [the dividend] will be very well accepted, this has been another break-even or loss-making year and for some farmers it may actually get them to the break-even stage - but that's a poor state of affairs when a one-off payment like this balances the books for one year."

Silver Fern Farms announced a full-year net operating loss yesterday of $30.6m in the year ended in September, compared with a near $25m profit the year earlier.

Sales fell 11 percent to almost $2.2 billion, while profit margins were also down.

Silver Fern Farms chief executive Dean Hamilton said the result also reflected a strong currency, amplified by a sharp fall in the British pound following the Brexit vote.

Mr Hamilton said he predicted a better year ahead.

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