Murray Goulburn announces it financial results for end of 2017

DROP: Murray Goulburn posts a drop in milk intake and revenue for the end of 2017. Picture: Cordell Richardson
DROP: Murray Goulburn posts a drop in milk intake and revenue for the end of 2017. Picture: Cordell Richardson

Murray Goulburn’s latest financial results show the dairy processor continues to struggle, with forecasted 2018 farmgate prices dependent on its planned sale to Saputo.

The financial results for the second half of 2017 show Murray Goulburn’s milk intake of 1.1 billion litres was down by almost 30 per cent, with revenue of $1.1 billion also down by 5.1 per cent.

Milk intake during 2017 was impacted by Murray Goulburn’s inability to pay a competitive farmgate milk price, however the processor anticipates an intake of 1.91 billion litres during the 2018 financial year.

Murray Goulburn forecast a full year price of $5.60 per kilogram of milk solids for 2018, subject to its sale to Saputo and a steady market, Murray Goulburn’s financial statement said.

“This outlook is subject to the successful completion of the Saputo transaction before June 30 2018, there being no further material deterioration in milk intake or dairy commodity prices, the Australian/US dollar exchange rate remaining broadly in-line with current rates, continued implementation of the commercial review and business improvement initiatives and no adverse changes in trading conditions or regulatory environments in key markets,” the statement said.

If the sale does not proceed, Murray Goulburn suppliers might lose out.

“While the transaction continues to progress as anticipated, if it does not proceed, and in the absence of an alternative transaction, Murray Goulburn may not be able to pay a competitive farmgate milk price,” the statement said.

Murray Goulburn chief executive Ari Mervis thanked suppliers for their ongoing support and commitment during this period.

“The first half of this financial year has continued to be challenging for Murray Goulburn. The inability to pay a competitive milk price has resulted in a substantial loss of milk. While management initiatives continue to address the cost base and commercial performance, the business remains exposed to competitive pressures and future refinancing requirements,” Mr Mervis said.

The sale of operating assets and operating liabilities to Saputo for $1.3 billion was announced in late October 2017, with this transaction subject to shareholder vote and Australian Competition and Consumer Commission and Foreign Investment Review Board approvals.

“The step-up announced in October 2017 as a consequence of the agreement reached with Saputo has assisted in stabilising milk intake. Successful completion of the Saputo transaction is expected to result in a favourable outcome for stakeholders, including ensuring value for shareholders and unitholders and a competitive milk price and milk collection commitment for suppliers,” he said.

Murray Goulburn shareholders are expected to vote on the sale in March or April, with the transaction’s completion planned by the end of June.