Warrnambool Cheese and Butter (WCB) has announced that it expects its earnings before interest, tax, depreciation and amortisation (EBITDA) in the current financial year to be double that of the 2013 financial year.
The company is forecasting EBITDA to be between $47 million and $52 million, up from $25.5 million, thanks to an improvement in market conditions as well as business improvement and strategic initiatives to change its product mix and to boost margins.
Last year, the company's net profit fell 50 per cent from $15.2 million to $7.5 million on the previous year on the back of flat international prices, a persistently high Aussie dollar and high raw milk cost relative to market conditions.
“The continuation of improved trading conditions and overall business performance highlighted in the 30 July 2013 trading update and described in detail in the FY2013 results announcement will contribute to substantially improved earnings in FY2012,” WCB CEO David Lord said.
The company has also reiterated its call to shareholders to reject a takeover offer by Bega Cheese of 1.2 Bega shares and $2.00 cash per WCB share, which the WCB board has described as “inadequate”.
“This improved earnings outlook is another reason why WCB is recommending that WCB shareholders reject Bega's inadequate offer for their WCB shares,” he said.
Bega Cheese today commenced sending its bidder's statement and offers to WCB shareholders. The offer will close on 28 November, unless it is accepted.
Bega Cheese executive chairman Barry Irvin recently said the company would dispatch its offer to WCB shareholders despite the opposition of WCB directors to the deal.
He said the offer has no minimum acceptance, so while Bega would be delighted to merge the companies, it would also be happy just to grow its shareholding in WCB and pursue its takeover bid in the future.
WCB said the continuation of improved trading conditions and overall business performance will contribute to substantially improved earnings.
