MURRAY Goulburn has already achieved $50 million in cost savings and is well on the way to reaching its goal of $100 million, according to MG chairman Phil Tracy.
Mr Tracy was speaking at the South Gippsland Dairy Expo last Thursday, noting that while the process had been hard on employees, who had lost their jobs, the restructure was necessary if the firm was to remain competitive in world and domestic markets.
“The past 12 months have been a period of rapid change, not only at our plants but also with the management.
“All bar two directors have changed in the past four years and with the appointment of our new CEO, Gary Helou, there’s a completely new management team bar one, so there’s been a lot of change at the top too.
“The real guts of what we have been doing is trying to take out $100 million in costs and we have already achieved $50 million in cost cutting and are well on the way to the next $50 million.
“It’s been hard on the employees who have lost their jobs but it’s been a critical phase in what we need to do.
“Next comes the exciting stage. How do we invest into systems and processes that deliver more income to farmers?
“With the continued strength of the Australian dollar this is even more critical.”
Mr Tracy said the $200m investment in the plants over the next three years was aimed at getting more efficiencies into the manufacturing operation.
He said the restructure plan extended to a “refreshment of the Devondale brand” and also trying to get closer to the firm’s customer base in the Middle East and Asia, complementing what MG already has in Japan and China.
“We have already seen those actions bear fruit,” Mr Tracy said.
Mr Tracy went on to underscore an earlier announcement about the firm’s performance in the previous financial year where it had delivered a “final weighted average price of $5.44 per kg”, revenue of $2.44 billion and a profit of $37.7 million.
“We are seeing significant growth in our retail and food businesses which turn over $830 million in a higher margin area of our business.
“The final dividend, 12 per cent on ordinary shares, means we have distributed over $27 million to our shareholders which equates to about 13c per kg milk solids.
“The announcement of a 1:10 bonus issue is also good news, recognising our long-term and loyal shareholders who have contributed over a long period of time.”
Mr Tracy also referred to the upcoming election of board members, noting there were seven candidates in Gippsland who deserved a considered response from shareholders.
He noted that MG had sponsored the breakfast information session at the South Gippsland Dairy Expo for 13 years and was pleased to see it was always a well-attended and well organised event.