Murray Goulburn profit down 60pc

04 Oct, 2012 04:00 AM
Gary Helou.
Gary Helou.

At a glance

  • Murray Goulburn's net profit after tax $14.5m
  • Underlying net profit after tax was $37.7m, before allowing for restructuring costs including redundancies, write-downs, and environmental liabilities
  • 12pc dividend, including 1 for 10 bonus share offer
  • Rabobank predict the return of milk supply 'scarcity'

    AUSTRALIA'S biggest dairy co-operative Murray Goulburn have revealed a net profit after tax of $14.5 million - the equivalent of a 60 per cent drop compared to the previous financial year.

    However managing director Gary Helou said the underlying profit after tax was $37.7m, before significant one-off costs were taken into account, which allowed for restructuring costs including redundancies, write-downs and environmental liabilities.

    Since joining the company in 2011, he's helped to achieve 50pc of a $100m cost-cutting goal.

    His intention has been to make Murray Goulburn more competitive, while being able to deliver better returns to farmers.

    But the decision saw the company slash 12 per cent of its workforce earlier in the year, and it's uncertain whether more job cuts are on the way.

    The good news for MG suppliers is they received a 12pc dividend, including a one for 10 bonus share offer.

    The processor also lifted its milk intake by 3.9pc to 2.94 billion litres, and boosted its total revenue by 3.5pc to $2.4b.

    "There is still more work to be done, but I am pleased with our achievements," Mr Helou said.

    The final weighted average farm-gate milk price was $5.44 per kilogram of milk solids - the third highest on record.

    Mr Helou added it had been a challenging year, but the co-operative was delivering on its promise to become a 'first choice dairy foods' company.

    Murray Goulburn suppliers Trevor and Irene Walker, who milk 215 cows at Allambee South, said the dividend to MG businessess had to be questioned.

    "We must be paid on milk price, not on shares," she said.

    "Gary Helou must remember for a sustainable milk supply to continue, he needs profitable dairy farmers.

  • "The co-op must allow this to happen, otherwise there is no difference between MG and a corporate company."

    She was pleased to see that MG was undertaking a milk price review, after the three-tier payment system came in a few years ago.

    "It has been detrimental to traditional seasonal suppliers, and we are falling further and further behind the average weighted price," she said.

    "We need to find a balance between something that works for the farmer and something that works for the manufacturer."

    The news from the dairy co-operative comes as Rabobank reveals a renewed period of milk supply "scarcity" is on its way - which should eventually translate into better prices at the Australian farmgate.

    Senior dairy analyst Michael Harvey said the tightening global milk market had been triggered by low milk prices, extreme feed costs and adverse weather conditions.

    The severity of the drought in the United States had caught many off guard, which had instigated a big herd retraction.

    In Australia, Mr Harvey said farmers were now bracing for a several upcoming challenges, including lower milk prices and higher grain prices.

    "Farmers in many regions face the possibility of poor seasonal conditions,'" he said. "And there's a chance there might be an El Nino."

    However the upside was that prices paid to producers were set to improve, he said.

    "It's just a matter of when," he said.

    United Dairy Farmers of Victoria (UDV) president Kerry Callow said milk supply scarcity would be a great thing if it reflected in prices.

    "We are yet to see if this will play out yet," she said.

    In terms of production, she said Victoria were well-placed to take advantage of demand.

    "The northern irrigation block is back on track, we just need Gippsland to dry out," she said.

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    Roger Crook
    4/10/2012 1:58:59 PM

    No doubt the dairy farmers are sympathetic. It would be interesting to learn of the views of the major milk retailers on this result.


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