Thursday, March 28, 2024

Westland predicts $6-$6.40

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Westland Milk Products is predicting a payout of $6-$6.40/kg milksolids (MS) for the coming season.
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The company kept its payout prediction for the 2013-14 season at $7.50-$7.70 before retentions.

Chief executive Rod Quin said Westland’s predicted payout was in line with the predictions by other New Zealand companies, all of which were experiencing the same international market conditions.

“The decline in payout for 2014-15 is due to lower international dairy prices and the relatively high NZ dollar,” Quin said.

“The market has continued to decline as customers limit their purchases due to higher inventories in their supply chains, and growth in milk and dairy product supply from Europe and the USA.

“What we have to consider is whether we are at the bottom of the price cycle, and here the signs are slightly more encouraging. There are indications that customers are buying more than prior months to refill their supply chains.”

Quin said that some industry commentators had speculated that the weakening NZ dollar might off-set the impact of lowered dairy prices and therefore benefit payouts, but he cautioned that, to date, the decline in the dollar had been very small and the currency remained over valued.

“Westland’s response to this situation is to continue its strategy to grow its capacity to produce higher value nutritional products such as infant formula,” Quin said.

“Our traditional reliance on bulk dairy commodities makes us more vulnerable to the cyclical swings of the international dairy market. Our recently announced investment in a $102 million nutritionals dryer at Hokitika will give us the capacity to shift more of our production to this end of the market where profits are higher and opportunities to lift payouts are better.”

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