MURRAY Goulburn announced last week an opening 2015/16 season price for the Southern Milk Region of $5.60 per kilogram milk solids.
It also re-confirmed the forecast Full Year 2015/16 Available Weighted Average Southern Milk Region Farmgate Milk Price (FMP) of $6.051/kg milk solids – consistent with its prospectus forecast.
This is the second highest opening price for MG despite a volatile international dairy commodity market.
The full year FMP forecast represents an increase on the 2014/15 forecast closing price and if achieved will result in MG suppliers receiving total farmgate returns in excess of $6/kg milk solids for the third consecutive year – a new record for MG.
MG’s managing director, Gary Helou, said the forecast full year FMP remains subject to changes in external factors such as global dairy commodity prices and prevailing exchange rates.
“It assumes an average Australian dollar of $US0.76 during the FY16 financial year and certain assumptions regarding commodity prices and other risk factors detailed in the MG Prospectus2.”
In addition to the FMP, MG has also forecast a dividend to be paid to MG shareholders in relation to financial year 2016 of between 15.5 and 18.1c/share depending on the outcome of the capital raising.
This amount is substantially higher than the dividend historically paid to MG’s shareholders.
Subject to franking credits being available, the dividend is expected to be fully franked.
“For the past three years MG has been executing a growth and value creation strategy,” Mr Helou said.
“This has seen us shift MG’s product mix away from commodity products to less volatile premium quality ready to consume dairy foods.
“Combined with our continuing focus on reducing cost in the business and driving efficiencies, the execution of this strategy has supported MG’s ability to pay a strong FMP.
“With the capital restructure nearing completion, we are well on track for the funding to be in place to build world-leading manufacturing capacity and capability in the key growth categories of dairy beverages, consumer cheese and nutritional powders to advance the next phase of our strategy.
“These capital projects, once operational, will produce value-added, dairy foods which will help to further enhance the value of MG’s milk pool.
“While commodity dairy markets remain subdued and exchange rates unpredictable, we are confident that demand growth for dairy foods will remain strong over the medium to long term.
“Many Asian countries are not self-sufficient in dairy and will need to import dairy foods to meet growing consumer demand for premium quality, ready to consume, dairy food products.
“MG is well-placed to capitalise on these trends as we have an established reputation as a trusted and reliable source of premium dairy foods.
“Combined with our close geographic proximity to the growth dairy markets of Asia, this places us in good stead to grow revenue and value and continue delivering sustainably higher farmgate returns to shareholders,” Mr Helou said.