On account of rising costs and low international prices, the company lost $ 305 million. There are only a few days before country’s largest dairy-held company celebrates, on September 24, its 75th anniversary. The celebration is will take place, however, at SanCor there are many concerned. The company’s latest balance sheet showed a gross loss of 305 million dollars for the year ending June 30th.
The financial situation is worse than going through the company since 2007, after a direct intervention of former President Nestor Kirchner, signed an agreement with the government of Hugo Chávez. In this agreement Venezuela contributed about $ 80 million in exchange for milk powder. That contract, which expires in 2020 and already repaid 23 million, prevented SanCor from becoming a part of the conglomerate Adecoagro. The magnate of Adecoagro, George Soros, had already signed a preliminary agreement of sale that allowed him to disengage from the debt burden that dragged the 90 of more than U.S. $ 200 million.
Oscar Carreras, president of SanCor in those years, is back at the head of the company at this difficult time. SanCor showed favorable results since 2010 and in 2012 even declared profits by almost 765 million pesos, but before commercial reality became hostile Carreras began removing senior managers and is reviewing the company’s strategies. Compared to its heritage, the loss of the last balance is still manageable. «We will continue taking steps and reviewing all business,» the company said.
In his letter to shareholders (61 786 cooperatives and producers), Carreras anticipated that the circumstances leading «to stake out the activities that are performed internally and postponed decisions.» Fasten the seatbelt and wait for better conditions seem to be the mandate of the hour in the dairy business.
Since SanCor justified the losses in factors over which they have very little chance of control. For instance, the international prices of dairy products (77% of the annual turnover of 5.886 million pesos, responded to the domestic market and the rest for export) were lower in the second half of 2012 and only rebounded this year. The balance sheet also mentions an exchange rate «without a significant development». All of this happened in a year that broke exportation records for the company. In this regard, the strategy will to expand on the niches of products with high added value; such as infant formula that is sent to China to avoid the «high volatility» in prices of milk powder.
Another catalyst for poor outcomes are the «higher costs throughout the production chain», such as payments to its producers like wage increases.
Source: Lechería Latina