Murray Goulburn (MG) says its full year $6.00 per kilogram milk solids farmgate price forecast has not come at the expense of profitability in the half year to December 2014.
According to the company, its half year sales revenue remained steady at $1.3 billion - down 1 per cent from previous corresponding period - and its half year net profit after tax (NPAT) was $12.9 million.
MG has also forecast a full year NPAT of $20 million to $30 million, which is broadly in line with last year.
“Delivering $6.00 per kilogram milk solids farmgate price, while maintaining profitability at the shareholder level, was of vital importance to dairy farmers,” MG managing director Gary Helou said.
He said MG mitigated the impact of global price movements with cost reductions and product mix optimisation.
“Key dairy ingredients prices globally have fallen significantly in the past six months, dragging down farmgate prices in dairy exporting countries by up to 40 percent.
“In contrast, MG’s forecast farmgate price of $6.00 per kilogram milk solids is 12 percent lower than the 2013/14 record closing price of $6.81. This price is evidence of the success of our strategy to invest in order to increase our diversification across domestic and export markets and product flexibility across retail, food service and ingredients, enabling us to maximise milk price in a variety of market conditions.”
Helou said that the moderating Australian dollar, while positive, had occurred too late in the December half to materially impact the half year results.
“We welcome the emerging benefit that a lower currency will provide our export business, particularly in the value added dairy foods segment through the balance of the year and into next year.”
According to MG, its international sales benefited from its strategic shift towards higher value finished goods such as nutritionals and the continued growth in international dairy foods.
Domestic sales increased materially compared to the prior corresponding period as a result of the company's entry into the daily chilled milk market via the ten-year agreement to supply Coles supermarkets private label milk in Victoria and New South Wales as well growth in the Devondale range of dairy foods products.
