Buttery prize
OPINION: Westland Milk may have won the contract to supply butter to Costco NZ but Open Country Dairy is having the last laugh when it comes to cashing in on NZ grass-fed butter.
Chief executive Rod Quin says this is a satisfying result given the tough farming and trading conditions during the 2012-13 season. The 30c/kgMS retention will support the company's strategic growth plan while the net pay-out to shareholders remains very competitive.
In spite of the impact of a major flood event in South Westland then one of the worst droughts in living memory for most of the Coast, milk volumes from shareholders were up 5.7% at 621 million litres, and milk purchased from other dairy processors contributed a further 68 million litres. Turnover remained steady at $535 million, with a high New Zealand dollar dampening the high market prices in the second half of the season.
"These results are a testament to the resilience and resourcefulness of our shareholders and staff," Quin says. "There is a huge focus on productivity and quality which runs through the whole company from our farmer shareholders and suppliers to the staff on the factory floor and the sales team that is maintaining and growing our position with key customers."
Westland ended the financial year with a slightly lower equity to assets ratio than last year at 49%. This reflects the cooperative's recent investments, particularly in the development of new plant for the manufacture of specialist nutritional products such as baby formula.
"The results confirm Westland's strategic decision to move from being a manufacturer of quality ingredients, to that of being a supplier of value-added nutritional products, which return higher prices for the company and better results for shareholders," Quin says. "Our financial position at the end of the 2012-13 season means we are well placed to continue this strategy; the new nutritionals plant will be operating to full capacity in the 2013-14 season and we are investigating options for further development."
Quin says that with milk volumes for the 2013-14 season - while early in the season - at 10% above budget, and with pay-out predictions at a near record high, Westland's shareholders have their sights set firmly on a successful year.
Other financial results include:
• Westland's average USD conversion rate was just under 80c versus a spot rate of 82c contributing a benefit of $14 million.
• The total return for a colostrum supplier for the 2012-13 season was an average of 3c/kgMS collected. Over Westland's total milk solids of 57 million kilograms this is an average return of 1.7c/kgMS.
• EasiYo (a wholly owned subsidiary of Westland) had an extremely positive year lifting revenue and net profit for an overall contribution of 10.5c to shareholders' pay-out.
• The most recent 2013-14 season forecast is $7.60 - $8/kgMS.
