Westland predicts $750m in sales

The highlights of the company's performance include a higher operating surplus than Fonterra, says chief executive officer Rod Quin told the annual general meeting.

But there's recognition that Tatua's payout was industry leading, indicating there is still room to improve. "There are signs of this already, with our current marketing and growth strategies generating better returns for the company and therefore shareholders."

Quin says while Westland's operating surplus was higher than Fonterra, the net pay-out after retentions was smaller. "However our shareholders strongly supported retentions as a means to remain competitive and to grow the cooperative strategically, delivering on investments. Retentions help fund projects such as the planned expansion of our infant nutrition capacity, which is central to our growth strategy."

Westland experienced a second daily milk peak on November 17 when 3.69 million litres was collected off-farm, Quin says.

"We expect to produce and sell 122,000 tonnes of finished product with sales revenue in excess of $750 million, resulting in a forecasted operating surplus of $7.60 - $8.00/kgMS before retentions. The forecast will be recalculated in December when more contracts are completed and foreign exchange cover is in place."

Westland Milk Products shareholders strongly supported changes to the dairy cooperative's constitution at their annual general meeting on Wednesday, November 27. They included an end to ward representation, with directors now elected at large across the organisation. Director terms will also increase from three to four years.

In all, a large majority of the cooperative's shareholders voted in nine changes to their constitution. These are expected to provide Westland and its shareholders with more options in terms of governance for the cooperative. Keith Smith was ratified as the new independent director and the company thanked and said farewell to David Spence after 12 years as an independent director.

Members also approved an independently assessed recommendation for an increase to directors' remuneration to bring Westland board members closer to the industry standard.

Quin says the meeting was well attended and very positive, with shareholders acknowledging the company's successful performance.

The annual meeting was told that progress on the new 30MW boiler, at a cost of around $23 million is ahead of schedule. "This installation will take the risk out of our energy supply and enable our older boilers to be decommissioned, producing considerable efficiencies in cost and energy use in the plant. The board has also approved the first stage toward a new $100 million dryer at Hokitika to grow our nutritionals capacity and commence investigations into a UHT plant at Rolleston.

For the future, Quin says that international markets, China in particular, continue to demand safe and traceable food and are prepared to pay higher than average prices to secure supply. He also noted the challenges facing the dairy industry to remain sustainable into the future.

"As a company we must ensure that the right to grow our farms and create wealth for shareholders and New Zealand is secure, but that must be achieved within the context of responsible and sustainable practices. In this regard, Westland's code of practice (which includes environmental and animal welfare standards) and quality provisions will be a rigorous requirement of all shareholders."