MURRAY Goulburn’s $40.6 million profit, in the midst of the dairy crisis, did not sit well with farmers, but the announcement did have some good news for the Leongatha site.
While revenue was down 3.3 per cent to $2.8 billion, buried in the cooperative’s announcements last week was confirmation investment in a new UHT site in Melbourne has been delayed indefinitely, with investment to go to existing UHT sites, like Leongatha.
The full details of that investment in a “brownfields” site are yet to be released.
The $40.6 million profit, and announcement of fully franked final dividend payouts of 3.91 cents per share, to unit shareholders, was a kick in the guts of dairy farmers.
Murray Goulburn had promised $6 per kilogram of milk solids and profit forecasts of $89 million which underpinned July’s public listing.
In February profits had dropped to $63m, then $42m in April.
It comes on the back of Murray Goulburn’s $200 million claw back over the next three years.
Interim CEO David Mallinson agreed that the cooperative was expecting to lose producers.
It warned in its risk statement that retirement from the industry and drop in farm productivity, as farmers try to cut costs, remains a “key risk to MG’s milk intake”.
It announced it had lost 240m litres, down 2.5 per cent compared to 2015, to 3.5 billion litres.
“FY16 has been a challenging year for our co-operative,” Mr Mallinson said.
“We faced an environment comprised of very challenging macro settings, including sustained low commodity prices, a volatile Australian dollar, changes in Chinese regulations, and difficult seasonal conditions across many of our key regions.
“This has placed our suppliers and Australian dairy farmers generally in a very difficult environment.
“The Board, MG’s management team, and I personally have also acknowledged to all our key stakeholders that MG’s FMP downgrade so late in the year added to the challenge of FY16.”
Murray Goulburn, Fonterra and major super markets were invited to attend a symposium with the Federal Agricultural Minister Barnaby Joyce soon after announcing their end of financial year figures.
After the symposium Mr Joyce confirmed the Australian Competition and Consumer Commission will investigate the cooperative in November.
Speaking after the event to media, Mr Joyce said the investigation would “get to the bottom of how this situation happened and how we can make sure it doesn’t happen again”.
Up for investigation will be arrangements for $1 milk in major supermarkets, and transparency and understanding of supply agreements and contracts.
The investigation is separate from a current ACCC investigation into whether milk companies acted unfairly when they slashed prices earlier this year, despite promising two weeks before the dramatic cut that prices would remain at $6kgms.