Murray Goulburn has announced a comprehensive strategic review which will look at all aspects of its strategy and corporate structure.
The review will include the Profit Sharing Mechanism and capital structure and was announced by MG’s CEO Ari Mervis when announcing the company's 2018 full year farmgate milk price (FMP) forecast of $5.20 a kilogram of milk solids to $5.40, with an operning price of $4.70.
“I see this review as a fundamental next step to strengthen MG for the future. While the previous decisions resulting from the manufacturing footprint review, including the announcement of three site closures were necessary, I do not consider them alone to be sufficient to move the business forward," Mervis said.
“Given the timeframes associated with the site closures, the expected financial benefits are not expected to be fully realised by MG until FY19. A further update on the strategic review is expected to be provided at the time of MG’s full year results in August.”
Murray Goulburn will also reportedly scrap some products following site closures including Devondale milkshakes, pet milk and Farmdale flavoured UHT, 8 Bar iced coffee, custard, desserts, with other products like Liddells, cream cheese and cheese production reportedly being transferred to other sites.
Suppliers are repoertedly shocked at the low milk price, but Mervis said that when setting the forecast, the company had taken a prudent view on key assumptions for commodity prices.
“Although global commodity prices have shown some recovery since this time last year, whole milk powder and particularly skim milk powder prices remain under 10 year averages. This has been somewhat offset by firmer butter and cheddar prices.
“We have also had regard to Global Dairy Trade auction results over the past two months and current futures pricing, both of which suggest some ongoing price volatility in global markets.”
