Chief executive Rod Quin said Westland, like dairy companies globally, had been adversely impacted by the significantly lower market prices in the last season, with total group revenue for the financial year 2014-15 down 23% on the previous year, at NZ$639 million.
But he said there was room for cautious optimism for an improvement and Westland had increased its forecast payout for the 2015-16 season by 30 cents to $4.90-$5.30/kg MS.
“The current market has shown some signs of increasing demand and price recovery,” Quin said.
“The key contributors to Westland’s payout are the prices for skim milk powder, casein and butter, with a growing contribution from infant and toddler nutrition.”
Quin said Westland, in line with its strategic objective of providing competitive and sustainable returns to shareholders, continued to focus on its nutritional and value-add growth strategy.
He said the co-operative’s Dryer 7 and UHT projects would both come on-line in the 2015-16 season. The retentions of 10c/kg MS in the 2014-15 season would support this growth plan.
He also noted the contribution to payout from Westland’s colostrum production and from its wholly-owned subsidiary EasiYo.
“The colostrum programme remains an active part of Westland’s product plans. The total return for a colostrum supplier for the 2014-15 season was an average of 6c/kg MS. Over Westland’s total milksolids of 70 million kilograms this is an average return of 3c/kg MS. EasiYo’s top line revenue increased 41% to $52.1 million and net profit doubled from last year to deliver a pre-tax return of a five cent contribution to pay-out.”
“I am confident the global oversupply is being consumed,” Quin said.
“However farmers in Europe and the USA are yet to find a new level of milk production and farm profitability. There are risks that need to be considered, but also cautious optimism to balance our views of the market going forward.”
