THE high Australian dollar and supermarket milk price wars are being blamed for a $5.7 million profit drop by Warrnambool and Cheese and Butter Factory.
Nanjing Night Net

The company posted a $30.7 million profit after tax for the last six months of last year compared with $36.4 million for the same period the previous year.

Warrnambool Cheese and Butter Factory CEO and managing director David Lord said the discounting war by supermarkets had hurt its bottom line.

Cheaper supermarket branded milk influenced the company’s retail sales drop of 5.5 per cent and the high value of the Australian dollar had also hit its export markets.

Despite the profit fall, Mr Lord said the bottom line was satisfying.

“This is a very positive result,” Mr Lord said.

“Particularly in the dairy industry the retail market is depressed, that is because of the competitive market place but also because of the price discounts.”

Mr Lord said the timing of payments for milk from major clients was a contributing factor in the drop with more revenue to come.

“That is something that will wash out when the full year is done,” he said.

“It’s genuinely in line with what we have expected.

“The Australian dollar is really impacting on the international market, whereas trading conditions domestically are good.

“The Australian dollar is really a problem for us.”

The company declared a fully franked interim dividend of four cents per ordinary share, the same as the one for the corresponding period in 2010-11.

Total milk intake increased by 3.5 per cent to 524 million litres compared with the previous six-month period.

“The full impact of growth in milk intake is yet to be realised with intake increasing gradually over the first half of 2012,” Mr Lord said.

“Full year intake is expected to exceed 900 million litres with the new flexible pricing package being well received by suppliers.”

The first half of the financial year saw raw milk representing 49.9 per cent of the estimated total milk cost for the year, compared to 45.9 per cent for the same period in the previous year.

WCB chairman Frank Davis said it wasn’t unusual for the phasing of milk expenses to vary from half year to half year influenced by the price performance of the international markets for the period.

The company has reduced its debt by 14.2 per cent to $28 million during the six-month period.

He said that by reducing debt the company was well positioned to invest in future growth initiatives and for another strong and consistent result in the 2012 full year.

This story Administrator ready to work first appeared on Nanjing Night Net.