Westland Milk Products has delivered a strong profit result for the second successive year.

Westland announced an after-tax profit of $55.9million for 2023, more than double a targeted $20 million annual return. The 2023 profit is above 2022’s $38.9 million record-breaking result, a $120 million rebound on 2021.

Westland CEO Richard Wyeth said the company would maintain its push towards long-term profitability by continuing to divert more milk solids into higher-value products in 2024.

Westland recently committed to pay farmers the 10c premium above Fonterra’s Farm Gate Milk Price for the 2024-25 and 2025-26 seasons, extending and improving on payment terms made under the original Scheme of Arrangement when the company was purchased.

“We’re proud of this result but we know we still have plenty of room for improvement,’’ Mr Wyeth said. “We’re tracking well to deliver on our five-year commitment to build sustainable growth year on year. A sustainable financial base means we can continue to offer farmers very competitive terms for their milk.’’

Mr Wyeth said revenue of $1.065 billion was slightly above last year’s result and very pleasing given the fall in global dairy prices.

“The advantage we have of course is the backing of one of the world’s largest dairy companies in Yili,’’ Mr Wyeth said. “Yili’s support has enabled us to invest heavily in infrastructure that will maximise revenue from high-margin products. But our ability to remain competitive on milk prices must rely on our ability to stand alone on financial performance.’’

A $70 million investment in a new lactoferrin plant at the company’s Hokitika plant supported by Yili is expected to continue to reduce reliance on traditional high-margin revenue sources such as infant formula for China, as import demand in that sector continues to soften.

Due for completion in the final quarter of 2024, first production at the plant will take place in quarter three. Commercial production is expected by the final quarter this year.

Mr Wyeth said a $40 million investment in a new butter plant at Hokitika in 2022 had allowed Westland to expand strongly in the US market. Westgold butter is now stocked in more than 3000 grocery retail outlets in the US, including Walmart stores. Westland also produces Kirkland Signature New Zealand Grass-Fed Butter for Costco.

Costco reported in their 2022/23 financial results that Kirkland butter sales increased more than 160 per cent year on year and continue to show strong growth.

The Westland-produced butter is now stocked in almost every Costco store in the United States, as well as Costco global stores, including Korea, Taiwan and New Zealand; with more international regions in the pipeline.

Richard Wyeth is available for interview.

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