Silver Fern Farms is giving itself a pass mark despite returning a net operating loss for the latest financial year.

The meat processor was $800,000 in the red for the September year, down from a profit of $5.4m in 2009.

Chairman Eoin Garden says in addition to some one-off costs, the high dollar and low lamb kill were the main reasons for the loss.

“Last year we paid off $50m of bonds, and this year about $75m worth of bonds were paid down.

"It’s about changing the debt gearing, investing for the future and reducing the reliance on debt funding."

Mr Garden says the company has a ‘robust’ balance sheet and is servicing its debt well, and isn’t expecting this season’s lamb shortage to trigger a bidding war.

"It’s going to be a challenging year, we’ve lost more than a million lambs due to the storms in the lower South and parts of the North Island.

"That’s on top of fewer lambs killed for export in the past year, so there’s an issue there for the industry to address in terms of the declining stock numbers.”

Silver Fern’s equity ratio now sits at more than 60 per cent, having cut its debt by $215m since August 2007.