Westland Milk Products Announces Second Highest Payout On Record
Westland Milk Products announced today its second highest profit on record with a total average payout of $7.80 per kilogram of milk solid (kgMS) less retentions of 10 cents, resulting in a final cash average payout to shareholders of $7.70.
The result is a 21% per cent improvement on last year’s total payout of $6.45. The result was achieved on the back of record turnover of $525 million, an improvement on the $422 million recorded in the previous corresponding period.
Westland chairman Matt O’Regan says the company’s performance was strong given shareholders were operating in a challenging climatic and economic environment.
“The 2011 year has been described by many shareholders as one of the toughest years yet experienced with a remarkably wet spring and dry spell in the summer presenting difficult farming conditions year round. It is therefore a credit to Westland Milk Products, including shareholders and staff that we have been able to deliver a strong payout today.”
During the year Westland Milk Products focused heavily on maximising value and efficiency, building on existing and new relationships with global customers and expanding milk processing capability. “These efficiencies have delivered strong financial results for our shareholders,” O’Regan says.
More than $380 million has been injected into the West Coast economy as a result of today’s announcement.
Colostrum payments in 2011 returned an average of 12 cents per kilograms to shareholders, a 33% per cent improvement on last year’s average of 9 cents per kilogram.
Westland Milk Products chief executive Rod Quin says delivering operational efficiencies continued to be a high priority in 2011. The company also continued to actively manage capital and prudently manage risk.
“Westland Milk Products finished the financial year with a strong balance sheet and favourable equity position of 54 per cent, enabling us to negotiate advantageous finance rates heading into the 2012 season,” Quin says.
“Lean principals have been applied to all facets of the business, resulting in many successful cost saving initiatives that have improved the bottom line.”
Additional milk and a reduction in water usage by 250 million litres, power and steam by 6.5 per cent, chemical usage by 20 per cent and fuel savings of 4 per cent, resulted in cost savings per litre of milk processed.
Westland Milk Products sales programme led to a record 90,000 tonnes of product being sold across all markets, of which 70 per cent was shipped to the Asia-Pacific region with Russia, the USA and the Middle East also showing promising signs of growth.
“We continue to take our successful product offerings to key customers around the world and as a result we are recognised as a global player among our key international and domestic customers.”
During the year, a strategic review cemented Westland Milk Products’ plans to transform the company from a medium-sized dairy commodity producer to a growth oriented, value added manufacturer.
“Westland’s decision to secure additional share backed milk supply drew a positive reaction from Canterbury dairy farmers and we are pleased to announce that our newly constructed reverse osmosis plant at Rolleston, Christchurch is now operational and processing milk from the region daily.”
In 2011, Westland Milk Products’ subsidiary yogurt business EasiYo contributed 3 cents per kgms to the final shareholder payout. EasiYo has more than doubled its production capacity since moving into its new premises in Albany, Auckland and is now producing approximately 1 million yogurt sachets per month. New export market Italy has been an outstanding success for EasiYo with sales increasing from zero to over $1 million in less than 12 months.
Quin says the outlook for the dairy industry remains positive, despite continuing volatility in global financial markets. “Shareholders can take comfort from the rapid recovery of the dairy industry following the global financial crisis and that demand for protein among emerging economies continues to strengthen.”
“We anticipate dairy prices will continue to be volatile but on average will settle at prices higher than previous long run averages. In 2012 Westland Milk Products will continue to focus on improving operational performance and shareholder returns through strategic expansion.”
The forecast for the 2011-12 season remains unchanged at $6.80 - $7.20 per kgms.